28/10/2009 Author: Gwyn Roberts

New index charts growth in secondary fund market

A growing market in the trade of second-hand hedge fund assets has led to the launch of a new index tracking the price of fund shares, which currently points to a robust period of business as discounts grow and deals increase.   

The new Hedgebay Global Hedge Fund Secondary Market Index has revealed a decrease in the average discount of hedge fund assets in September, the third consecutive month that the index has fallen.

The fall, compared to stable markets and positive hedge fund performance, has shown that hedge fund investors are still using the secondary markets to resolve discrepancies on their balance sheets, rather than generating liquidity. The need for such services has driven higher volume on the secondary markets, with the number of trades for the year up 15% on those for 2008.

The new index, launched by Hedgebay – the largest secondary market platform in the hedge fund space – will provide investors with statistics on the key aspects of the secondary market, including the average discount or premium to net asset value (NAV) of hedge fund shares traded during the month.