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10-26-09 6:29 AM EDT | E-mail Article

LONDON -(Dow Jones)- Hedgebay Trading Corporation, a company matching buyers and sellers of stakes in hedge funds, said Monday it has launched the first index tracking prices in the secondary market, as more investors seek to trade in and out of hedge funds after last year's heavy losses.

In September, the average price paid for a secondary holding was 82.9% of face value, marking a 4.5% decline in the average price paid at the start of the year. The hefty discount stands in contrast to average performance gains of around 17% at hedge funds in the first nine months of the year, and highlights how investors are using the secondary market to cash out of funds they no longer believe in, while others are looking for a bargain to get into funds they like.

Hedgebay said Sept. marked the third consecutive month the index has fallen, after starting the year at 86.82% and climbing as high as 92.26% in May.

The index's moves are erratic, though, since the highest and lowest prices paid for funds can vary widely from month to month. The highest trade tracked by Hedgebay in Sept. was 96% of par and the lowest was 62%. Prices paid can be at a premium or discount to a hedge fund's net asset value -a number typically calculated each month by a fund's administrator on the worth of the fund's investments.

Company Web site: www.hedgebay.com

-By Margot Patrick, Dow Jones Newswires; +44 (0)20 7842 9451; margot.patrick@ dowjones.com 


  (END) Dow Jones Newswires
  10-26-090629ET
  Copyright (c) 2009 Dow Jones & Company, Inc.
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