Boutique broker/dealer shop VanthedgePoint Group is teaming up with money management firm G Squared Group Asset Management to launch a fund of hedge funds -- an investment vehicle that will invest in a pool of individual hedge fund managers.
VanthedgePoint serves as a prime broker dealer, providing stock trading clearance and loans to small to midsize long/short equity hedge funds. These funds typically don't yet have sufficient heft to tap the traditional prime brokers such as
, says VanthedgePoint CEO Geoffrey M. Tudisco in Manhattan.
VanthedgePoint's hedge fund roster is approaching total assets of $1 billion, and the planned fund of funds will cherry-pick funds and pool them into an investment vehicle known as White Hill Fund. The idea is to eventually raise billions in capital from institutional investors such as pensions and insurance companies as well as wealthy individuals and family offices.
"By partnering with VanthedgePoint, our idea is to greatly reduce the No. 1 risk regarding investments in emerging managers: operational risk," said Gualtiero Giori, managing partner of G Squared in a statement. "This allows us to offer our clients not only the potential outperformance typically demonstrated by emerging managers, but also a structure whereby they can track new talent while avoiding concentration risk and minimizing non-investment due-diligence work."
Tudisco says launching a fund of emerging hedge funds makes sense because larger pension funds typically have restrictions on investing more than 10% of their capital in any one fund. So pooling smaller investments reduces concentration risk, he notes.
VanthedgePoint's clientele include Bronxville, N.Y.-based Wheelhouse Capital run by Chuck Bryceland, who previously spent three years as a managing director in asset management for
Bank of America
White Hill hopes to be up and running making trades by May, Tudisco says. The fund of funds will be run by Giori, Tudisco says. "They will use our technology to analyze investment performance and determine which funds are suitable," he adds.