New York-based family office Summer Road has put $100 million (€73.1 million) into an alternative mutual fund, following a trend of ultra high net worth families shifting away from traditional hedge funds.
According to media reports, Summer Road, headed by David Sackler, the grandson of Raymond Sackler who bought Purdue Pharma in 1952, has provided the seed funding for the Balter Long/Short Equity Fund.
The Balter Capital Management fund promises much lower fees than traditional hedge funds by pooling up to five hedge funds with a similar need for additional assets.
Balter, headed by Boston-based hedge fund investor Brad Balter, will charge performance fees of just 2.19% or 2.54%, depending on the share class, compared with traditional hedge funds that charge around 1.5% for management and 20% for performance.
Research suggests that family office investors continue to be wary of hedge funds, despite many historically assigning large allocations to the asset class.
The Family Performance Tracking survey conducted mid-way through 2013 found 22% planned to increase their allocation to hedge funds and 28% planned to decrease it in 2013.
The study, carried out by the Institute of Private Investors (IPI), found the average portfolio had 18% allocated to hedge funds and/or funds of funds.