Lid lifted more on hedge funds with new data

Date: Tuesday, September 4, 2007
Author: Svea Herbst-Bayliss, Reuters

Investors got their first glimpse at monthly statistics about which types of U.S. hedge funds are pulling money in or giving it back, when a data firm published numbers that analysts say could shape investment choices.

TrimTabs Investment Research, already well-known in the $11.2 trillion mutual fund industry for its weekly snapshots of where investors put their money, moved into the $1.9 trillion hedge fund industry when it published asset flow data for July late on Monday evening. The company teamed with BarclayHedge and said it will release the data 12 times a year.

In the secretive hedge fund industry, this is big news because until now statistics on asset flows have been published just four times a year, usually weeks after the quarter ends.

Hedge funds, unlike mutual funds, are loosely regulated and not required to report performance or flow data to anyone.

"This is a very good thing. The data will be more timely, and it will be a barometer of what is going on in the space," said Thomas Whelan, chief executive of Greenwich Alternative Investments, a hedge fund advisory and asset-management firm.

It also gives the TrimTabs BarclayHedge Fund report a lead, at least for now, over competitors like Hedge Fund Research (HFR) Inc and Lipper, a global fund intelligence firm owned by Reuters, in delivering critical information that clients can use to invest in these portfolios.

Hedge funds, while once reserved for wealthy private investors, are now found in many pension funds' and endowments' portfolios, and chief investment officers are always looking for data to give them an edge on picking these portfolios.

"This report will be like anything else that allows you to plan better," said Sol Waksman, president of BarclayHedge, who has worked with TrimTabs on the project since the spring.

Now investors can track more frequently which hedge fund strategies are popular and which ones are not. This information may help them negotiate hedge funds fees, arguing, for example, that if the strategy is out of favor, funds should be cheaper.

TrimTabs Barclay's inaugural report made headlines when it reported that investors pulled $32 billion out of hedge funds in July, marking the biggest monthly redemptions since 2000.

The summer has been a difficult time for many hedge funds after a crisis in the subprime mortgage market spread and caused losses at many high profile portfolios like Tudor's Raptor fund and D.E. Shaw's Composite International Fund.

Competitors took note of TrimTabs new report, but said it would not prompt them to change their own offerings.

"I am aware of the information but don't think it will affect us in any meaningful way," said Ken Heinz, president of HFR, which releases highly respected flow data every quarter.

Indeed the monthly TrimTabs numbers may serve a different purpose than the quarterly numbers, investors and analysts said.

"The quarterly numbers will have a bigger impact because they come out only four times a year and the monthly numbers may be more volatile and have to be adjusted more often," Greenwich Alternative Investments Whelan said.