Thu, Jan 29, 2015
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. Investing - U.S. investors favor currency hedged Europe ETFs as euro tumbles, Quants win back investors as Swiss franc fuels volatility gains, David Einhorn's $7bn hedge fund is loading up on this stock, Hedge fund BlueMountain Capital unveils Ocwen Financial short, claims default on notes[more]

    U.S. investors favor currency hedged Europe ETFs as euro tumbles From Reuters.com: U.S. investors stung by the falling euro who want to stay invested in Europe are turning to exchange-traded funds designed to strip out the impact of the region's currency. The biggest among so-called "cur

  2. News Briefs - Millennials use tech tools to jump into investing, Winklevoss twins to launch bitcoin exchange with FDIC insured deposits, Robertson’s legacy from hedge funds to New Zealand, Real estate managers exploring smaller open-end funds[more]

    Millennials use tech tools to jump into investing It is the Facebookification of monetary investing. From social networking platforms that enable young investors to stick to every other's stock-picking mojo, to internet sites for initially-timers hungry for a piece of the Silicon Valley

  3. Update: Prosecutors seek 12 years for hedge fund manager Francisco Illarramendi[more]

    Komfie Manalo, Opalesque Asia: Federal prosecutors have asked the court to sentence convicted hedge fund manager Francisco Illarramendi to 12 years imprisonment for running an elaborate Ponzi scheme that bilked investors hundreds of millions in dollars, including a Venezuelan pension fund, report

  4. Institutions - Ontario pension fund leader calls all asset classes ‘expensive’, Taiwan's BLF plans $2bn in alternative mandates[more]

    Ontario pension fund leader calls all asset classes ‘expensive’ From WSJ.com: The head of one of the world’s largest pension funds said that across asset classes, “everything is expensive.” Ron Mock, who leads Canada’s $141 billion Ontario Teachers’ Pension Plan, said that the plan would

  5. Opalesque Exclusive: Ex-Citi trader launches 'sleep-at-night’ long/short equity fund[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: After working at Citi's proprietary trading desk, managing a large portfolio between 2008 and 2011, Joel S. Salomon founded SalauMor Management in New York