New Long/Short Equity Index at S&P

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.

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.