Wed, May 27, 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. News Briefs - Ergen says LightSquared plan unfairly favors hedge funds, Why hedge fund managers make good advisory clients, I learned a lot about dad-bros after spending 4 days in Vegas with 2,000 hedge funders[more]

    Ergen says LightSquared plan unfairly favors hedge funds LightSquared Inc.’s bankruptcy plan gives hedge funds that invested in the broadband company a leg up while blocking telecommunications firms from competing with it, a fund owned by Dish Network Corp. Chairman Charles Ergen said in

  2. Opalesque Exclusive: SEC approves proposed changes to Form ADV, '40 Act - comment period to follow[more]

    Bailey McCann, Opalesque New York: Hedge funds and providers of liquid alternatives will want to pay close attention to proposed reforms approved by the SEC yesterday. The changes will require more frequent reporting, as well as a closer look into social media, liquid alternative strategies, and

  3. Investing - Hedge funds buy swathes of foreclosed subprimes, force up rents, float rent-bonds, Hedge funds buy Actavis, Valeant. ETFs join the party, The most loved biotechs of big hedge funds, Stocks to buy ... according to hedge funds, Atlantic City bond offering attracts hedge funds as buyers, Okumus Fund Management discloses huge new Ascent Capital Group stake[more]

    Hedge funds buy swathes of foreclosed subprimes, force up rents, float rent-bonds From Boingboing.com: When a giant hedge fund is bidding on all the foreclosed houses in a poor neighborhood, living humans don't stand a chance -- but that's OK, because rapacious investors make great landl

  4. Institutions - Institutional investors turn to real estate, planes, Assets at Boston’s five biggest family nonprofits rise to $3.5bn[more]

    Institutional investors turn to real estate, planes From Joins.com: The National Pension Service and domestic emerging market specialists who did not know where to invest in a low interest rate environment are turning to other investments like the blue-chip real estate market abroad.

  5. Opalesque Exclusive: A lot of hedge fund investors are beginning to recognise the need for ongoing cyber threats monitoring[more]

    Benedicte Gravrand, Opalesque Geneva: Corporate Resolutions Inc. recently formed a strategic partnership with iThreat Cyber Group. The two companies have worked together for years, assisting clients when challenging

 

banner