Reuters ramps up hedge-fund research

Date: Tuesday, March 8, 2005

Business news and information provider Reuters says its Lipper research arm is buying TASS Research and HedgeWorld to strengthen its hedge-fund research and data business.
Terms of the deal, which is expected to close March 9, weren't disclosed. The deal will help Lipper tap into an asset class with high and growing demand, while Reuters will benefit from HedgeWorld’s editorial knowledge. Both TASS and HedgeWorld will get access to Reuters's worldwide distribution in return.
"Hedge fund assets have grown dramatically, rising from a $30 billion industry in 1990 to an estimated $975 billion today," said Johann Wong, chief executive at HedgeWorld. Hedge funds are pools of wealthy investors that are less regulated than mutual funds and use riskier strategies such as leverage and shorting stocks to enhance returns.
TASS Research, a unit of hedge fund advisor Tremont Capital Management, maintains one of the largest and oldest hedge-fund databases currently covering about 6,600 funds.
HedgeWorld provides news, research and analysis on the hedge-fund industry to 55,000 registered users, and is owned by a group of private investors including Tremont. Lipper chief executive Michael Peace said the acquisitions will bolster the firm's coverage of hedge funds, which now hold nearly $1 trillion in global assets.
"Long funds aren't the only products being offered anymore," Peace said, noting that the integration of the TASS and Lipper databases would create the largest hedge-fund database in the world. Peace said Reuters and Lipper will publish news and research from HedgeWorld, which was founded in 1999 as an independent online community for the hedge-fund industry. "The purchase of a well-known database like TASS illustrates a trend towards the demystifying of the hedge fund world and the industry opening up to wider pool of investors," said Steven M. Cohen, chief investment officer of Kellner DiLeo Cohen & Co., a New York-based hedge-fund firm.
A decade ago, hedge fund investors were mainly wealthy individuals. Now alternative investments are almost a conventional part of portfolio diversification for institutions, Cohen said. With that institutional interest has come an increase in the number of consultants analyzing the industry and a proliferation of specialized benchmarks to measure hedge fund performance.
Standard & Poor's and MSCI have developed hedge fund indexes in recent years, joining industry stalwarts such as TASS, the Barclay Group, Hennessee Group and Van Hedge Fund Advisors International. Shares of Reuters trading on Nasdaq gained 2.3% to US$49.50 in afternoon trade March 8.