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Portfolio > Alternative Investments > Hedge Funds

MSCI Signs First Licensing Agreement for Investabl

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NEW YORK (–Almost a year after launching its original hedge fund indexes, Morgan Stanley Capital International has announced the formation of an investable hedge fund index that will be part of an agreement with Lyxor Asset Management, Paris.

The MSCI Hedge Invest Index will be launched later this summer and will be constructed and maintained by MSCI using eligible funds from the Lyxor hedge fund platform. The investable index will remain separate from the MSCI Hedge Fund indexes and fund database that was launched in July 2002 to assist investors in conducting peer group analysis and research Previous HedgeWorld Story.

The new index initially will consist of 60 funds, but overtime that number is expected to grow as the assets on the platform increase and more funds become eligible for the index, according to Simon Midgen, vice president and head of licensing for MSCI. Lyxor will be responsible for selecting and conducting due diligence on those underlying funds

MSCI has published its general methodology for investable hedge fund indexes on its web site. “It provides a unique and transparent framework to construct an index,” said Mr. Midgen, of the methodology.

The index offers weekly liquidity of the underlying funds, which are a diversified grouping of the investments strategies in the hedge fund universe represented by the broader MSCI Hedge Fund Composite Index, according to officials. MSCI hopes to gain interest in the investable index from hedge fund investors, asset managers, banks, insurance companies, private banks and broker-dealers.

The index is the result of input from clients around the world, said Mr. Midgen. The Hedge Invest Index will be used by Lyxor as the basis for an index tracker fund that will track the performance of the index and replicate its returns.

Bruno Lebre, chairman of Lyxor Asset Management, said in a statement, “Market demand for a fully investable and liquid hedge fund index has been growing for some time and we believe that an index calculated by MSCI, with its strong brand and reputation for high quality indices, will be widely used by the investment community.”

MSCI is not the only index provider licensing its index to asset managers. Standard & Poor’s, New York, already has announced numerous licensing agreements for its investable hedge fund index through a partnership with PlusFunds. Those deals include partnerships with BNP Paribas, Paris, and Rydex Global, New York Previous HedgeWorld Story. Besides other offering agreements in the works, PlusFunds, New York, expects to roll out investable sub-indexes and has already started the process with introducing the S&P Managed Futures Index Previous HedgeWorld Story.

HFR, Chicago, also rolled out investable hedge fund indexes earlier this year. That index is made up of 50 underlying hedge fund separate accounts that fall within eight separate hedge fund strategies Previous HedgeWorld Story.

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