NEW YORK (HedgeWorld.com)–Standard & Poor’s expanded its lineup of investable hedge fund indexes by adding the S&P Equity Long/Short Index, which is composed of 24 fund strategies, including five already contained in the S&P Hedge Fund Index.
The selected funds were chosen for asset size, tenure and style purity, as well as the ability to offer US$100 million in capacity and the ability to manage in a separate account.
Finding long/short equity managers to agree to a separate account was not difficult, said Justin Dew, senior hedge fund specialist for S&P. Managers recognize that assets in the fund are likely to be relatively sticky. “In a perfect world, it should be a long relationship,” given that funds are likely to be removed only for unusual reasons, he said.
But finding managers in some of the non-U.S. regions that could guarantee US$100 million in capacity was more difficult, Mr. Dew said. Managers in Asian equities, for example, were less eager to guarantee that much capacity, he said.
What Your Peers Are Reading
S&P needs to obtain seed money in order to start the fund and investors were willing to contribute. “We think it’s a pretty good time to be doing it,” he said.
S&P executives eventually would like to add separate indexes for all nine of its hedge fund sub-strategies, he said. S&P already had introduced a managed futures index to sit alongside the main S&P Hedge Fund Index. The other seven strategies are: equity market neutral, fixed income arbitrage, convertible arbitrage, merger arbitrage, distressed, special situations and macro.