Personal capital alignment can limit risk-taking
The discussion highlighted a paradox where a fund manager having too much personal or family capital in their own fund can lead to excessive risk aversion.
The argument
While allocators generally favor managers with 'skin in the game,' the speakers noted that if a manager's entire family wealth is concentrated in the fund, the fear of loss can prevent them from taking the optimal level of risk required by institutional clients.
Hear it yourself
"show. Let's get into it. Welcome to other people's money. I'm your host, Max Weethy. And today, I'm joined by Kieran Cabana, founder and CIO of Old Farm Partners, a New York based fund of funds, and he's also the host of the Thematic Investors podcast. Kieran, thank you so much for joining me today. Max, thanks a lot for having me. Appreciate it. I wanna start out with a little bit of your past experience. You spent a number of years at Soros Fund Management as the head of external managers. Soros, obviously, a legend in the hedge fund industry."
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