E298: How Family Offices Think About Illiquidity, Taxes, and Compounding
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What key experiences shaped Jeffrey Fulk's career in finance?
So Jeff, you've had a prolific career, starting with being a top PM at Guggenheim Partners, to your time at Hightower, to today, you're at Alti Global, which has roughly $100 billion in AUM. But I want to go back to 2006, early stages of career when you were at Signet Capital Management. Tell me about that experience.
Yeah, it was really serendipitous. So even before my whole finance career, I started as a golf professional. So I came out of undergrad and taught golf for a couple of years. And my entryway into finance was really post-grad school. I ran into one of the members of the golf course that I used to work for, and he worked for Signet Capital. And this was a burgeoning fund-to-funds business. at one of the best times to be a fund to funds investor. And they were growing assets quite quickly. They were largely a European firm and they were looking to grow in the US. And so they brought this gentleman into the business originally as a consultant and then tasked him with the responsibility of building out the US business.
And because the job was initially going to be from his basement. He wanted somebody that knew his family and he was comfortable having in his house. And this was kind of back before the era where people were working from home or it was common to work from home. And so that's what got me my shot in this industry. I got a six-month contract with Cignet and basically it was off to the races. The market was really attractive for opportunities in hedge funds. everyone was looking to allocate to hedge funds because they were exciting and they were at the forefront of finance. And so all the stars aligned and that kind of put me on my path to where I am today.
So tell me about how the collapse of long-term capital management led to the opportunities at Cignet.
Yeah, this is a great story and it really frames how we think about investing more broadly and how we pull that forward through different eras of investing. So what was fascinating about long-term capital management is it was really the culmination of all of the modern portfolio theory that was created in the 70s to the 90s. And a lot of this came out of the Chicago Booth School, where modern portfolio theory, Black-Scholes, option pricing, and all of these more sophisticated investment techniques were brought to the forefront and really led to the proliferation of derivatives in the market. And so long-term capital management really took this to the extreme and they were doing these trades that were based on an efficient market hypothesis.
And they basically pushed it so far into a market that was not broad enough or deep enough or sophisticated enough to handle what they were doing. And so when long-term capital management collapsed, it created this incredible opportunity in the market. And so relative value fixed income spreads got really wide. There was opportunities in emerging markets and the hedge funds that came out of, or after long-term capital management had this unique lens into where markets were going. Just, they got ahead of what the market could sustain. And so the, post the collapse of long-term capital management, there were all these really interesting and compelling strategies. And that led to this really fantastic era that I talked about earlier in terms of the opportunities we saw in the hedge fund space and why so much money came in to that market from 2000 to 2007, 2008.
Span on that.
Why were there so many opportunities in the hedge fund space during that decade?
Yeah. So when there had been so much money that had gone into groups like long-term capital management, and then the banks were copying trades that they saw long-term capital management doing. And so they took these prices to extreme levels. And so maybe a good example would be merger R became a really interesting strategy, which is you play an M&A investment. And so if XYZ company gets bought for $30 a share, typically it'll trade at a discount to that. So let's just call it $25 a share. And what long-term capital management did was they brought this efficient market hypothesis to the
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Chapters
4 chapters
1
What key experiences shaped Jeffrey Fulk's career in finance?
0:00–10:02
2
How did the collapse of long-term capital management create investment opportunities?
10:02–34:28
3
What are tax-aware strategies in modern portfolio construction?
34:28–35:44
4
How does AlTi Global approach investing in private markets?
35:44–42:51
Speakers
2 identifiedMore from How I Invest with David Weisburd
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