A clutch of hedge fund organizations have turned themselves into family offices in recent years.

The trend of hedge fund firms transforming into family offices continues. A renowned fund manager, David Tepper, has reportedly turned Appaloosa LP into a family office to run his personal wealth so that he can have more time to manage the Carolina Panthers, his professional football team.

Executives at the $13 billion hedge fund have discussed several scenarios for when they could return outside clients’ money, the Wall Street Journal, citing unnamed sources, said last week. 

Tepper’s money makes up more than 70 per cent of the firm’s assets under management, the WSJ said. It quoted a spokesman for Appaloosa saying that the firm has not set an exact timetable for returning all outside money. 

Several hedge fund businesses, such as that of renowned investor George Soros, have transformed their organizations into family offices and no longer take in third-party money. Some of them have done this to avoid falling under the regulatory arm of the Securities and Exchange Commission. Regulatory changes post-2008 prompted several firms to make the shift. A recent case is that of Randall Yuen, founder of Jafra Capital Management, whose business was founded less than three years ago. (For another case, see here.)

Steven Cohen’s SAC has taken the same course. In another case (2016) Scott Bommer, founder of SAB Capital Management, returned client money from his hedge fund after 17 years so that he could focus on managing his own wealth. There are numerous reasons why hedge fund principals might opt for a family office structure. They may simply feel that it is time to focus on different things, enabling them to pursue philanthropic ambitions and invest more broadly than a hedge fund might, for example.

This publication has spoken to Citi Private Bank about the significance of this trend. See here.