"All of this came about because of a desire to offer high quality alternative investment products not usually offered by one asset manager to registered independent financial advisors, broker-dealers, wealth management firms, family offices and investment consultants," explains Worthington.
By building both the private equity and the hedge fund sides of the business, Hatteras has grown to manage $1.8 billion in assets, serving 7,000 investors through 225 different firms that are Hatteras clients. Hatteras has a 12-person investment team.
"We are continuing to grow," Worthington says, "and I think that validates that we have something unique to offer. Our funds are designed to reduce volatility. We seek to capture upside, but we focus on losing less than the standard indexes on the downside. Over time, that downside protection is what enables investors to protect capital and build wealth."
The combinations and flexibilities being provided are attractive to many advisors, as they seek to offer solutions to their high-net-worth and institutional clients.
Brian Jacobs, Hatteras' CEO, has another way of explaining the appeal. "Hedge funds today are sometimes considered more risky than they are. In fact, they were originally known as 'hedged' funds because they were supposed to hedge against market losses," Jacobs says. "So, a big part of our job is educating advisors to the fact that letting Hatteras handle their clients' portfolios using hedge funds and private investments-as a core alternative allocation-could reduce some of their risks.
"For the most part, you put money in a fund of hedge funds to reduce risk and into a fund of private equity funds to increase returns," Jacobs adds. Many advisors who turn to Hatteras have clients who want to live the rest of their lives comfortably, so they want returns with less risk. There won't always be enough time to recoup losses if they occur now. Hatteras has alternative investment funds registered with the SEC, which advisors like because of the frequency and transparency of financial reporting for those funds.
"Today, we are providing a combination of private equity and hedge funds, both combined and separately, in traditionally structured limited partnerships as well as mutual fund offerings. We created these access points to enable advisors to use alternative investments for all of their clients-larger clients, as well as those with fewer assets," Jacobs says.
Advisors Given Asian Private Equity Tour
Hatteras Funds views China and India as lands of opportunity in the private equity space-so much so that they took a group of eight advisors to those countries to see for themselves.
China and India are among the largest and fastest growing economies in the world and provide unprecedented opportunities for those seeking alternative investments, Hatteras believes.
"We traveled with the group to Mumbai and Bangalore in India and Beijing and Shanghai in China, holding meetings with various private equity firms, as well as the portfolio companies these firms invest in," says Hatteras Funds President Robert L. Worthington. "The advisors were able to ask questions directly to these private equity funds and companies to learn more about the specific industries in which private equity companies in China and India are currently investing."