Thu, Aug 25, 2016
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Hedgebay: Illiquid trading dominates as secondary market awaits return of locked-up funds, market decreased by 3% in August

Wednesday, August 25, 2010
Opalesque Industry Update - Average price falls 3% on SMI, rises 8% on IAI

The average price for assets on the secondary hedge fund market fell slightly to 75%, a drop of 3%, in August.

Hedgebay’s monthly secondary market index continued its general trend of recent months, with near-par trading, deals at around 100% of NAV, once again in short supply. This trend is being driven by the scarcity of locked up funds on the secondary market since the credit crisis hit.

The unwillingness of managers to close funds to new investment means that much of the activity on the secondary market has been by investors exiting positions in suspended funds, rather than investors trying to access high performing funds. Trading therefore continues to centre around shares in gated or suspended funds, as represented by Hedgebay Illiquid Asset Index. Average trading on the IAI rose to 67% in July, the highest average recorded in nearly a year.

Elias Tueta, co-founder of Hedgebay, commented:

“Funds that are closed to new investment are still an extreme rarity at present. We will eventually see funds close to new investors if good performance on the primary market continues, and when we do, we will see the secondary market once again being used for its original intention – to allow hedge fund investors to access high performing funds that have closed to investors. Currently, secondary market users are focussed on risk mitigation and capital raising, and this has kept the average price at a relatively low level.”

Mr Tueta believes that whether we see the reappearance of closed funds in the next few months will not only interest users of the secondary market, but have wider implications for the hedge fund industry as a whole:

“We are currently at an important juncture for the market. In the last few months we have seen inflows and performance in the hedge fund industry suggest that investors have confidence in hedge funds once again. However, we have also seen crises in global markets, the Greek debt crisis being a prime example, which hedge funds have not been immune to. If performance can exceed interest rates and equity returns over the coming months then we will see demand for hedge funds grow, and this will make the re-emergence of locked up funds distinctly possible. However, if markets suffer another downturn, we may see the cycle begin again, as investors try to recover their money. It will certainly be interesting to see which way the market goes.”

(press release)


Hedgebay Trading Corporation: As the first and largest secondary hedge fund market provider, Hedgebay - founded in 1999 - can rely on historical illiquidity data dating back several years. The IAI and SMI primarily target investors in hedge funds, such as fund of hedge funds, pension funds, endowments, foundations, insurance companies, family offices, wealth managers and HNWIs. However, Tueta believes that the index also provides pertinent information for the wider global investment and financial services industry, including leverage providers, regulators, investment banks and prime brokers.

For nearly a decade Hedgebay Trading Corporation has provided hedge funds with a market to trade positions by matching buyers with sellers. Since its launch, Hedgebay has provided secondary market data to registered users of its website (www.hedgebay.com).


Bg

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. LatAm hedge funds surge in 1H to +24.4%, emerging markets assets rise[more]

    Komfie Manalo, Opalesque Asia: Hedge funds investing in Latin America posted strong gains through mid-2016, reversing declines in four of the past five years, including the last three years, to lead all areas of hedge fund performance through the first half of 2016, according to the latest HFR Em

  2. Asia - LGT Capital Partners: Alternatives set for continued rise in Asia[more]

    From Asianinvestor.net: More flows are likely into insurance-linked strategies, private equity and trend-following strategies/CTAs, given the benefits of such investments, argues LGT Capital Partners. Despite the numerous quantitative easing programs and bailouts of recent years, the quest for

  3. Investors yank money from hedge funds after poor performance[more]

    From Marketwatch.com: A growing exodus from hedge funds extended to two of the biggest names in the industry Tuesday, Tudor Investment Corp. and Brevan Howard, as disenchanted investors increasingly shun what was once the hottest place to put money. The funds’ problem is clear: They just aren’t perf

  4. Banks look at hedge funds differently - and it should matter to allocators[more]

    From Valuewalk.com: Looking at two bank reports on the same topic can often yield interesting results. There are times when bank research is best viewed from the standpoint of how their analysis does or does not correlate with one another. Regarding hedge fund allocation decisions, one bank appears

  5. Legal - Hedge fund’s fixer kept deals flowing with bribes, U.S. says, Big four banks sued by U.S. hedge funds over BBSW, Lessons for hedge fund managers from the government's failed prosecution of alleged insider trading[more]

    Hedge fund’s fixer kept deals flowing with bribes, U.S. says From Bloomberg.com: With the Miami villa, stopovers at New York’s Plaza Hotel and millions channeled in bribes to win mining deals, Samuel Mebiame was the relationships guy in a corruption scheme that spanned continents, accord