Sat, Apr 30, 2016
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Volatile trading on hedge fund market likely to extend in 2011 - Hedgebay

Thursday, December 23, 2010
Opalesque Industry Update - Hedgebay’s secondary market index shows further fluctuations

Prices on the hedge fund secondary market remain volatile, according to the latest data from Hedgebay. A lack of price stability has been the recurring theme of 2010, evidenced once again when the average trade price dropped to 74% in November after registering the highest average in six months during October.

October’s high of 81% was the third time in a row the index had risen, suggesting that consistency might slowly be returning to the market after a turbulent year. However, the drop shown in November has cast doubts over that theory, with the volatility now expected to extend into 2011.

The Hedgebay Index has been inhibited by a distinct absence of funds trading near par over the last year, suggesting a continued lack of confidence in the market. A relative lack of pricing transparency has also created uncertainty in the market, although Hedgebay believe that their newly launched Pricing and Valuation Consultancy Service will help to bring greater insight to this area.

Elias Tueta, co-founder of Hedgebay, commented:
“In many ways, this month’s results have been typical of 2010. After an unsettled year of trading on the secondary market, the general sentiment amongst investors is one of caution. This has created an artificial ‘cap’ on the price they are willing to pay, and the fluctuations in the index have reflected that. Every time the price looks as though it is rising consistently, we saw a fall in the index. There is currently little to suggest that that will change in the early part of 2011.”

Tueta has also pointed to the recent governmental interventions at several large hedge funds as a reason for November’s drop. The interventions have made investors anxious that their managers, or managers on offer on the secondary market, could face the same treatment.

Meanwhile, Hedgebay’s Illiquid Asset Index which measures trading in gated or suspended funds rose quite significantly to 44.09%. Notably, the majority of transactions in November took place in this part of the market. Hedgebay believes that the surge of trading in these illiquid assets shows a renewed determination among investors to clean their portfolios. Two years on from the credit crisis, the ongoing cost of servicing illiquid assets has proved to be a drain on investor capital, making the disposal of such assets a necessity:

Tueta continues:
“There is something approaching fatigue in the illiquid end of the secondary market, as investors try to start anew in 2011. A clean portfolio free from illiquid assets will allow investors a clean bill of health going into the first quarter of next year, and free up capital for some of the funds that have shown good performance this year. This pattern of trading will likely continue throughout December.

(press release)

Source

kb

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. Hedge funds see $14.3bn outflows in Q1, CTAs and multi-strategy lead net inflows[more]

    Komfie Manalo, Opalesque Asia: The hedge fund industry saw net outflows of investor capital in the first quarter of the year, totaling $14.3bn, data from Preqin showed. This continues from the $8.9bn overall net outflows that funds recorded in Q4

  2. Third Point calls Q1 "catastrophic" for hedge funds[more]

    Bailey McCann, Opalesque New York: The first quarter of this year was rocky for hedge funds based on aggregate performance from the industry, but now we are beginning to hear what the managers thought of it as quarterly letters make their way to investors. Dan Loeb, CEO of New York-based $17 bill

  3. Asia - Stabilization of China's capital outflows may hinge on Janet Yellen, Fink says China to do well this year as bubble threat postponed, Chinese hedge fund to invest in India’s infrastructure[more]

    Stabilization of China's capital outflows may hinge on Janet Yellen From Bloomberg.com: Whether China’s recent stabilization of its currency and capital outflows continues -- or downside pressure reignites -- may hinge in large part on Janet Yellen. If the Federal Reserve chair sticks to

  4. …And Finally - After all, judges are human too[more]

    From Newsoftheweird.com: In March, one District of Columbia government administrative law judge was charged with misdemeanor assault on another. Judge Sharon Goodie said she wanted to give Judge Joan Davenport some files, but Davenport, in her office, would not answer the door. Goodie said once the

  5. Comment - Unmasking the men behind Zero Hedge, Wall Street's renegade blog[more]

    From Bloomberg.com: Colin Lokey, also known as "Tyler Durden," is breaking the first rule of Fight Club: You do not talk about Fight Club. He’s also breaking the second rule of Fight Club. (See the first rule.) After more than a year writing for the financial website Zero Hedge under the n