MEMPHIS, Tenn. (HedgeWorld.com)–Consulting Services Group LLC began using the S&P Hedge Fund Index as an option for its clients, and seven or eight institutions are on the verge of investing in it.
CSG, Memphis, Tenn., will add the hedge fund index to its investment options for its institutional investor client base. The firm plans to use the master index and three sub-indices for asset allocation and performance benchmarking. CSG was attracted to the S&P index based on the index’s transparency, daily pricing, and risk reporting, while institutions also are comfortable with S&P’s standing as a benchmark creator, said Joe Wade, president of Alternative Investment Strategies LP, the alternatives unit of CSG. CSG consults on assets of more than US$22 billion, of which US$2 billion is in hedge funds.
He said seven or eight CSG clients are taking a look at investing in the S&P Hedge Fund Index as a first move into hedge funds, and he expects all of them to do so. “It’s a much easier step for the institutional investor to look at the S&P index,” as opposed to a traditional hedge fund of funds, Mr. Wade said. S&P is a trusted name in the institutional world, he said. Perhaps once institutions who decide to go the index route become comfortable with the investment approach of hedge funds, they’ll move on to hedge funds of funds or single strategy funds, Mr. Wade said.
Plus Funds Inc. will work with CSG on the implementation of S&P Hedge Fund index accounts. Plus Funds has an exclusive license with S&P for certain types of hedge fund index funds. Plus Funds already inked deals to offer S&P Hedge Fund index funds with United Overseas Bank and XL Capital. S&P hasn’t officially unveiled its index, but expects to do so soon.