Formed in 2006, Balter Capital Management, LLC ("BCM") is a registered investment advisor focused purely on hedge fund research and investing, with both pooled and uniquely tailored offerings. Our dedicated focus on hedge funds and liquid alternatives provides us with the highest level of insight and differentiation by applying our rigorous approach to sourcing, analyzing, monitoring and interacting with both investment and operations personnel at a given firm. We utilize both established funds as well as continuously sourcing “non-brand name” managers that have not yet been identified by the broader investment community. BCM analyzes and invests in hedge funds globally across all strategy sets available to hedge fund investors. BCM’s clients all share the desire for a differentiated approach to hedge fund investing.
Our clients include family offices, ultra-high net worth individuals, institutional investors, all of whom recognize our desire to adhere to the following investment and management philosophies:
- Preference to invest in “right-sized” funds
- Operational integrity is the most critical element for any investment
- Challenge the Status Quo
- Hedge Fund of Fund investors should pay for Oversight or for Performance, but not both
Right Sized Funds
Assets under management of any given fund and strategy is highly relevant to the selection process. While BCM does not maintain strict parameters on fund size, we favor funds that manage an appropriate amount of capital for their strategy so that they can invest in size or time-restrictive opportunities where larger funds would find their capital sizing precludes them from investing. Research has repeatedly shown that managers can generate better risk adjusted returns with a smaller capital base.
When assessing a fund or firm, operational integrity will always supersede performance. We meticulously analyze the operations and organizational structure for all hedge funds we invest with prior to committing capital. We do not utilize a “check the box” approach to operational due diligence, as we believe that for each given fund’s strategy and asset size, there are operational best practices that must be followed to mitigate business risk for a hedge fund investment. BCM also employs proprietary measures designed to identify potential operational failures that are often overlooked and are the result of our years of industry experience.
Challenge the Status Quo
Many industry participants have taken a passive approach to hedge fund investing. BCM believes that hedge funds require an active approach to identify the right manager over time. Hedge funds operate in a far different environment today than when the industry first came to prominence. Extensive and on-going diligence on both existing and potential hedge fund investments allows us to maximize potential returns for our client base. We do not accept the status quo for industry fees, liquidity terms, or transparency. We've learned from experience that there is a negative correlation with a fund's assets under management and it's returns. By challenging the industry on these and other metrics, we successfully add value for our clients.
Pay for Oversight or Pay for Performance
Within the Hedge Fund of Fund industry, BCM does not believe in the standard of charging investors both a management fee and an incentive fee. All of BCM’s funds are structured with share classes that offer our investors the choice of either paying for oversight through a management fee or an incentive fee based on performance. For further insights into BCM’s fund of fund philosophy, please ask us for a copy of our AIMA published White Paper “Fund of Fund Fees: Change is in the Wind.”