Richard Elden, founder of Grosvenor Capital Management, died June 27 at the age of 84 from metastatic melanoma, confirmed his son, Thomas.
Richard Elden, a lifelong Chicagoan, founded Grosvenor Capital in 1971 after a career as a journalist and as a securities analyst at investment bank A.G. Becker & Co.
He is widely credited as creating the first U.S.-based hedge funds-of-funds firm. Forty-six years later, Chicago-based Grosvenor ranked fourth in assets managed worldwide in hedge funds of funds with $25.9 billion as of June 30, 2017, according to Pensions & Investments' most recent ranking of hedge funds-of-funds managers.
Grosvenor managed a total of about $50 billion in commingled and customized hedge funds of funds as well as in private equity, real estate, infrastructure and multiasset strategies as of June 30.
"My father spawned an entire industry. It started as a cottage industry and has become enormous," Thomas Elden said in an interview, noting the fund-of-funds concept expanded to encompass private equity, venture capital, multiasset and outsourced-chief-investment-officer approaches.
"When my dad started, most clients were high-net-worth individuals. There was no precedent for institutional investors to outsource investment manager selection with a second layer of fees. In the 1970s, a major endowment wouldn't have considered outsourcing its investments," Thomas Elden said.
The turning point for institutional investment in Grosvenor — and other firms' — hedge funds of funds came via a joint venture in the mid-1990s with Morgan Stanley (MS) Investment Management to attract Japanese institutions. The success of that effort, he said, "transformed the hedge fund-of-funds business from a high-net-worth focus into an institutional business."
Thomas Elden, formerly a GCM partner, now is founder and CEO of Origami Capital Partners, a Chicago-based private equity manager with about $500 million under management.
Richard Elden retired from Grosvenor in 2005.
"Dick was a true pioneer and visionary. He anticipated the growth and evolution of the alternative investment universe earlier and more clearly than most," said Michael Sacks, GCM's CEO and Richard Elden's immediate successor, in a June 28 memo to the firm's employees obtained by P&I.
Mr. Sacks said Mr. Elden's career as a journalist, "with a healthy amount of skepticism, a love for digging deep and separating wheat from chaff and a strong desire to 'get the story,'" was great training for a career in money management.
Richard Elden was one of the first practitioners of detailed manager due diligence in the hedge funds-of-funds industry, "seeking ever better and more information to reduce the risk of investments," Mr. Sacks stressed.
The senior Mr. Elden "loved investing" and "especially loved discovering and cultivating great investors and great investments. He was among the earliest investors with and sponsors of some of the legends of alternative investing. Early support and sponsorship from Dick Elden helped to accelerate many careers," Mr. Sacks wrote.
Thomas Elden said his father was relentless when it came to persuading excellent hedge fund managers to open their closed funds to Grosvenor for investment.
"The word `no' always energized my father," Thomas Elden said.
In accordance with his father's wishes, a memorial service is not planned, Thomas Elden said.
In addition to his son, Richard Elden is survived by his wife, Gail; daughter, Cynthia; daughter-in law Christina Ochs; and sister, Joan Feitler and her husband, Robert.
The family's suggestion for charities for memorial contributions are the Usher III Initiative, the Melanoma Research Alliance, Robert H. Lurie Comprehensive Cancer Center Melanoma Program of Northwestern University and Columbia University School of Journalism Knight-Bagehot Fellowship.