Fri, Mar 6, 2015
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Hedgebay saw accelerated trading volume in hedge fund secondary market in Q4-2011, surpassing 2010

Friday, February 17, 2012
Opalesque Industry Update - A steady rise in transaction frequency characterized the last quarter of 2011, a year that Hedgebay believes could be seen as significant in the history of the secondary market. The recent volume has seen 2011 trading levels surpass those of 2010, and alongside improving depth and breadth in the market place, both in the number of participants and types of investors, points to the increasing popularity of secondary trading.

With an increasing number of participants using the market to both access high performing hedge funds and remove illiquid assets from their portfolios, pricing remains volatile. The full breadth of pricing was seen in the fourth quarter, with trades completed at 1% and 100% of NAV, clearly showing the dispersion of assets being traded.

The average price of completed trades showed similar volatility, falling from 79% in October to 65% in November, before rising again 86% in December – a year-long high. Lindsey Clavel, Managing Director for Europe, believes the rise in price from November to December is an encouraging sign for investors.

Lindsey Clavel commented: "In the years since the crisis we have seen the average price drop in December, as investors eager to clean up their portfolios for year-end settle for lower prices for their illiquid assets. The fact that the average price rose to a year long high, combined with the high level of trading volume, may signal that the market is finally coming to terms with its liquidity issues.

The recent market movement aside, Hedgebay believes that 2011 represented a significant year in the secondary market’s life, with a new range of investors finding value in using the secondary market. Increasingly regulated engagement between buyers and sellers also points to the emergence of a more mature secondary market.

Lindsey continues: "2011 saw a rise in overall trading volume and a significant influx of new market participants. We have also seen subtle shifts of behaviour from secondary market users, with improving cooperation between managers in fostering the industry. This all adds up to a deeper and more mature secondary market, and we believe this will attract even more participants to the market in 2012. We expect another year of growth and evolution of the market next year."

2011 was also notable for a number of new service providers entering the industry, yet more evidence of the secondary market’s place in the financial mainstream. However, with one high profile provider exiting the market recently, Hedgebay has warned that the increasing number of competitors will lead to a survival of the fittest among providers.

Lindsey added: "We see it as a boon for the secondary market to have a number of providers competing for investors, and this competition has undoubtedly contributed to both the size and professionalism of the industry. However, as that trend increases we will see the best providers flourish, while others may exit. This will ultimately benefit the industry’s maturation. Hedgebay pioneered the market twelve years and almost $6 billion worth of trades ago, and it is exciting to see the market how much the industry has evolved since then."

(press release)

Hedgebayprovides the gateway to the secondary market for hedge funds. As the leader in secondary market-making, Hedgebay is preeminent in matching sophisticated buyers and sellers of hedge fund interests and other illiquid alternative investment assets.

Founded in 1999, Hedgebay has been successful in sourcing, executing and settling billions of dollars of secondary market transactions. Hedgebay’s clients include funds of hedge funds, ultra high net worth family offices, banks that provide leverage and structured products, pension funds, endowments and foundations. 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. SkyBridge opens office in Palm Beach County[more]

    Where better for a southern location than South Florida? SkyBridge Capital, which is headquartered in New York, has opened an office in Palm Beach Gardens. Palm Beach Gardens is a "Signature City" in northern Palm Beach County, with a population of around 49,000.

  2. Outlook - Philippe Jordan predicts 'alternative beta' to displace hedge funds, Stan Druckenmiller says Europe, Japan stocks will outpace U.S.[more]

    Philippe Jordan predicts 'alternative beta' to displace hedge funds From Investordaily.com.au: The disappointing performance of hedge funds in recent years is a result of "too much money chasing too little alpha", argues Capital Fund Management. Speaking to InvestorDaily, CFM partner Phi

  3. Investing - As rig count falls, hedge funds pile into long crude futures, Parus tactically shifts long/short exposure ratios, Mario Draghi outflanking Kuroda as bearish euro bets surge, Prime Capital’s 500.com bet derailed after 41% drop[more]

    As rig count falls, hedge funds pile into long crude futures From 247wallst.com: In the week ended February 27, the total number of rigs drilling for oil in the United States came in at 986, compared with 1,019 in the prior week and 1,430 a year ago. Including 281 other rigs mostly drill

  4. Outlook - 5 reasons why 2015 is looking like a breakout year for alternative investments, Hedge fund manager Dan Loeb predicts disappointment for funds seeking energy distress[more]

    5 reasons why 2015 is looking like a breakout year for alternative investments From Forbes.com: …After a strong 2014, the public markets have been off to a choppy start in 2015. This year, savvy investors may be looking for alpha elsewhere. For many institutions and high-net-worth indivi

  5. Event-driven strategies lead hedge fund gains in February while CTA rally shows signs of fatigue[more]

    Komfie Manalo, Opalesque Asia: Hedge funds ended February on a good note (+0.8%), confirming the positive momentum witnessed since the start of the year, reported Lyxor Asset Management in its Weekly Briefing. As of the end of February, the Lyxor He