GlobeOp indexes to shed light on hedge fund flows

Date: Tuesday, April 5, 2011
Author: Sinead Cruise and Laurence Fletcher, Reuters

* Data to track 8-10 pct of global hedge fund industry
* Indexes to show actual and expected capital flows

LONDON, April 4 (Reuters) - GlobeOp Financial Services (GO.L) is launching two new indexes tracking capital flows of a tenth of the world's hedge funds, putting one of the most opaque segments of the asset management industry under the microscope.

GlobeOp will publish monthly reports based on actual and expected capital movement data gathered from all funds it provides administration services to, providing regular and independent insight into the mood of hedge fund investors.

"There is a real lack of independently confirmed industry data against which hedge fund managers and investors can benchmark their allocations and performance," Hans Hufschmid, chief executive of the hedge fund services company, said on Monday.

"We summarise aggregate subscription, redemption and performance figures for our clients' funds. It was therefore a logical next step to ... repackage a subset of this data into consistent, timely indices focused on capital movements."

While hedge fund investors tend to make rapid decisions on investment strategies in volatile markets, operators of the funds they move money in and out of are often reluctant to reveal the size or the direction of net flows.

Investors pulled more than $280 billion net from hedge funds in 2008 and 2009 as clients reacted to the collapse of Lehman Brothers and subsequent financial sector turmoil, according to Hedge Fund Research, which also provides data on flows.

The GlobeOp Capital Movement Index consists of cumulative monthly net of subscriptions to, and redemptions from, hedge funds administered by London-listed GlobeOp, divided by those clients' total assets under administration (AuA).

The second index is called the GlobeOp Forward Redemptions Indicator and consists of redemption notices received from hedge funds administered by GlobeOp, again divided by total AuA.

GlobeOp's total AuA represent 8-10 percent of the estimated assets currently invested in the global hedge fund sector. The investment strategies of the funds tracked by the index span a representative industry sample, the company said.

"Because data is calculated ... at the same point in time and using consistent mathematical methodology, the self-selection and self-reporting biases of many other indices are eliminated," GlobeOp managing director Tony Glickman said, referring to possible flaws in indexes which rely on funds to supply data.

"In addition, because data is reported within days of the business month-end close, the delay factor inherent in some other indices is eliminated," he said.

The GlobeOp Capital Movement Index is due for publication on April 12, with the GlobeOp Forward Redemptions Indicator due on April 21.