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Hedge Funds Side Pocket

Hedge Funds Side Pocket

Firm Trying To Price Hedge Fund Side Pockets

Side pockets are estimated to account for 10% of the $1.8 trillion in total hedge fund assets. Now, a firm that specializes in creating secondary markets for hedge fund shares is trying to create a market to open up these side pockets.
Hedge fund investors stuck in side pockets, those opaque segregated accounts, may be able to buy some clarity.

A new service started by Hedgebay, an outfit that makes secondary markets for hedge fund stakes, is trying to put a price tag on those hard-to-value side pockets. By creating a system, the financial firm hopes to bolster trading in these types of assets.

“There’s a lack of information and transparency for this type of illiquid asset,” says Elias Tueta, a co-founder at Hedgebay. “More informed investors will be more willing to trade.”

Side pockets aren’t new. Hedge fund managers typically use them to set aside thinly traded investments they think will appreciate over time — say, shares in the privately held Facebook. Source

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