Secondary Market Rises For First Time In Four Months

Oct 22 2010 | 1:34pm ET

The hedge fund secondary market bounced back in September amidst continued heavy trading.

The Hedgebay Global Hedge Fund Secondary Market Index rose almost half a percentage point to 78.93% last month. Much of the increase was the result of a raft of near-par trading, with some stakes changing hands for the full net asset value of the investments.

"September is traditionally one of the quieter months on the secondary market, but increasingly we are seeing that tradition no longer applies in the aftermath of the credit crisis," Hedgebay's Elias Tueta said.

"With the end of the third quarter nearing, the scramble for liquidity meant that sellers were willing to settle for slightly reduced prices for assets in any class," he added. "The number of high quality hedge fund shares still on the market means that there will always be willing buyers for these reduced assets, and this sparked much of the near par trading we saw in September."

Private equity and credit strategies found the most takers last month, the first in four to see the index rise. Even Hedgebay's Illiquid Asset Index inched up to 47.58% of par, from 44% in August.

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