Hedgebay Sees Stability In Secondary Hedge Fund Market

Mar 29 2011 | 7:54am ET

The secondary hedge fund market returned to stability in February 2011, with average trade prices rising for the second consecutive month, according to market provider Hedgebay.

The rise in average price—to 73.15%—although “slight” suggested “the market is establishing a more consistent average,” according to Hedgebay

The secondary market for hedge funds allows buyers to capitalize on liquidity and access to highly sought-after fund managers.

February also saw the first premium trade—at 103% for a diversified commodity fund—since April 2010. Hedgebay suggests this may point to a return to pre-crisis confidence among investors. Nevertheless, the company is “preaching caution” for the time being. Says Hedgebay co-founder Elias Tueta:

“The market is currently in a stasis between crisis and recovery, with trading being dictated by both the legacy effects of the downturn and increased investor confidence. Improved conditions mean that most sellers have no immediate obligation to sell, and currently buyers are unwilling to match their prices.

“This is a temporary holding pattern on the market, and is a sign that we are closer to the highs of pre-crisis trading than we are to the illiquid state of the post crisis market. Once buyers have the confidence to match sellers’ prices, we will see consistently higher average prices, and the kind of premium trade we have seen this month will become more common. The 103% trade is, we hope, a sign of things to come. Certainly, we expect 2011 to be a significant year for the hedge fund market.”

Founded in 1999, the Nassau-based Hedgebay is the first and largest secondary hedge fund market provider. Its primary service has sourced, executed and settled billions of dollars of secondary market transactions, matching sophisticated buyers and sellers of hedge fund interests and other illiquid alternative investment assets. It serves funds of hedge funds, ultra high net worth family offices, banks, pension funds, insurance companies, endowments, foundations and sovereign wealth funds.


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