Family offices target hedge fund clients after taking talent

(Sept 5): They’ve already come for the talent, poaching traders from the likes of Millennium Management LLC. Now Asia’s family offices are going after the hedge fund industry’s clients, too.

Take Tolaram Group, which runs a US$500 million ($685 million) family office in Singapore. After hiring former Millennium and Goldman Sachs Group Inc. staffers to manage US$100 million of its own cash, Tolaram plans to convert the portfolio into a hedge fund and accept outside money next year. It’s the first foray into asset management for a family that made its fortune in textiles, consumer goods, and other mostly non-financial businesses.

Not content to simply cut costs by managing their wealth in-house, an increasing number of ultra-rich clans want to turn their family offices into revenue generators by charging the merely well-off to invest alongside them. While skeptics say conflict-of-interest concerns and limited track records may deter outside investors, the trend underscores the growing sophistication of Asia’s family offices and could pose a threat to incumbent money managers in a region that’s minting millionaires at the fastest pace worldwide.

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