12/12/2012

Family Office Shows Managed-Futures Fund

An investment advisor that runs $550 million for several wealthy families will soon open a quantitative managed-futures vehicle to outside investors.

Promus Capital of Chicago plans to offer its Triad Futures fund in the first quarter, pending registration with the CFTC. One of Promusí founding families has been running the strategy for 20 years. The firm is showing a 12-year track record with a 13% average annual return. This year, the fund is down about 13%, following gains of 16.4% last year and 25.1% in 2010.

The fund, led by portfolio manager Tim Clark, currently has about $10 million of assets. Based on early investor interest, Clark believes Triad Futures has the potential to grow to $100 million in short order.

Under new CFTC rules, private funds that manage more than a minimal amount of futures must register as commodity pool operators by Jan. 1 (see Regulatory Roundup on Page 6). Promusí Triad Trading unit also plans to register with the futures regulator as a commodity-trading advisor. An exemption for family offices the CFTC issued Nov. 29 doesnít apply to multi-family operations like Promus.

The Triad fund trades liquid futures tied to commodities, currencies, stock indexes and fixed-income securities. Prior to this year, the fund had only two down years, dropping 4% in 2009 and 5.2% in 2004. It gained a whopping 32.5% in 2008, when the HFRI Fund Weighted Composite Index fell 19%.

The investment program was set up by former professional football player Johnny Musso, who played for the Chicago Bears in the late 1970s. He began trading with his own money in 1992, then opened the strategy to a few other families about a decade later. In 2008, Promus was founded by Mussoís sons, Brian and Zachary Musso, to manage money for those families. In addition to the Mussos, Promus advises the families of Terrence Toth, former chief executive of Northern Trustís investment-management division, and Andrew Code, a co-founder of private equity firm Code Hennessy & Simmons.

Clark, whose expertise is automated-trading systems, joined Promus in May. He previously worked at Chicago-based Endeavor Trading, which agreed in March to be acquired by Sun Holdings. His resume also includes positions at Futrex Trading and TradeLink, both based in Chicago.

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