Investors finally have a tool to gauge prices for sales of hedge fund interests on the secondary market. Hedgebay Trading Corp., Ridgefield, Conn., the longest established — 10 years plus — marketplace for buying and selling hedge fund shares has introduced the Hedgebay Global Hedge Fund Secondary Market index.
The index charts the average discount or premium to net asset value over monthly, one-year and 10-year periods; the highest and lowest prices of individual trades; and the top two hedge fund strategies traded in a given period. “The index is an essential barometer for the state of the hedge fund industry, by signposting fluctuations in investor sentiment and liquidity levels in the market. Strong historical correlations can be found between the average discount of trades on the secondary market and the future performance of the hedge fund industry,” according to a Hedgebay news release.
In October, for example, the average price for a stake in a hedge fund permitting redemptions was about 87 cents on NAV, compared with an average of 83 cents to NAV in September. The highest single trade was for 100% of NAV and the lowest, 40%. “During a month of heavy trading volume, the average price is up almost 400 basis points ... This, perhaps even more than the trade at 100% of NAV was a sign of increasing optimism, but it is not yet conclusive,” said Elias Tueta, Hedgebay's co-founder, in the release. — Christine Williamson