Thu, May 24, 2018
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. Investing - Hedge funds hike Smurfit Kappa positions amid takeover deal hopes, Hedge fund IBV Capital digs deep to unlock long-term value in a competitive market, Eisman of 'The Big Short' fame recommends shorting Deutsche Bank[more]

    Hedge funds hike Smurfit Kappa positions amid takeover deal hopes From Irishtimes.com: Two US hedge funds, Davidson Kempner and York Capital, have accumulated a combined 4.74 per cent interest in cardboard box maker Smurfit Kappa using financial derivatives. It comes as many investors cl

  2. Foundations of hedge fund managers gave big to controversial donor-advised funds[more]

    In the world of philanthropy and tax-deductible charitable giving, the explosion of donor-advised funds has touched off intense debate. Now, there is evidence that the DAF boom is being further fuelled by hedge fund foundation money. Four of the top five foundations that gave the most to large do

  3. Third Point to raise $400 million for SPAC, Farley to run it[more]

    From Reuters.com: Daniel Loeb's hedge fund Third Point LLC plans to raise $400 million for a "blank check" company which will be run by outgoing stock market operator NYSE Group President Thomas Farley, according to a regulatory filing made on Tuesday. The new company, referred to on Wall Stre

  4. Study: For hedge funds, smaller is better[more]

    From Institutionalinvestor.com: The smaller the hedge fund is, the better its performance is likely to be, according to a new study. The study - "Size, Age, and the Performance Life Cycle of Hedge Funds," released April 26 - sought to determine whether a hedge fund's size and age had any effect on i

  5. Hedge fund returns rose in April for first gain since January[more]

    From Bloomberg.com: Bloomberg Hedge Fund Database shows returns flat this year - Currency strategies had the biggest monthly gain at 13% Hedge fund returns increased 0.78 percent in April, reversing two consecutive monthly declines. The swing of 134 basis points was driven by gains in all seven