Hedge Fund Secondary Market Low

Hedge Fund Secondary Market Hits New Low

The hedge fund secondary market hit an all-time low in the end of 2009 in terms of prices offered for hedge funds.  The largest secondary hedge fund market provider reports that last month sellers received less than 80 cents on the dollar.  See this page for an explanation of the Secondary Market.

“The choice that investors face when they find themselves with unwanted illiquid assets is slow bleed vs cut your losses and move on,” Hedgebay co-founder Elias Tueta said. “The kinds of illiquid assets that most hedge fund investors find themselves holding today are very long term in nature.  Last year's credit and equity market rallies allowed hedge fund managers to sell a fair amount of assets and return capital.  What wasn't sold last year could be with us for quite some time. Since these assets are illiquid, managers do not frequently change their pricing and as a result they are ‘non-performing’ in an investor's portfolio.  This dead weight makes achieving performance targets very difficult."

Prices on the Hedgebay Global Hedge Fund Secondary Market Index—which had remained near or above NAV since its inception in 1999—plummeted in the summer of 2008. After a brief recovery in mid-2009, when prices topped 90% of NAV, the index again tumbled, sinking below 80% for the first time. In December, not a single trade was completed at or above NAV; the closest was 97%. The lowest trade went for just 56% of NAV.  Source

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