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.

The 24 fund strategies in the new long/short equity index will be based on the following hedge funds, grouped by region. For Asia, it will be: AlphaGen Hokuto Fund Ltd. Japan, Sparx Long-Short Fund Ltd. and Tiedemann/Ayer Asian Growth Ltd., according to S&P.

For Europe, the tracking funds are: Aspect European Equity Long/Short Program; New Star Hedge Fund Ltd.; RAB Europe Fund Ltd.; ReachCapital International Fund I Ltd.; Sofaer Capital European Hedge Fund; Thames River Kingsway Fund; and TT International: Long Short Europe.

And the U.S. equity fund strategies in the fund: Ardsley Offshore Fund Ltd.; Ascend Offshore Fund Ltd.; Blue Coast Partners I LP; Bricoleur Offshore Ltd.; Chilton Investment Partners; CRM US Value Fund Ltd.; Cumberland Partners; EGM Long/Short Growth Strategy; Omega Overseas Partners Ltd.; Ridgecrest Partners QP LP; and Willow Creek Capital Partners LP.

Multiregional fund strategies will be based on Lazard Global Opportunities and Lion Global Opportunity Fund Ltd.

PBarr@HedgeWorld.com