GlobeOp Financial Services will offer an independent monthly window into hedge fund capital flows with the launch next week of the first in a planned series of GlobeOp Hedge Fund Indices.
“There is a real lack of independently confirmed industry data against which hedge fund managers and investors can benchmark their allocations and performance,” said Hans Hufschmid, chief executive officer, GlobeOp Financial Services. “GlobeOp is the first administrator to publish independent fund liquidity and investor sentiment data. This transparency was produced by combining our significant platform of assets under administration with our data management expertise. As a publicly listed company, we periodically report our assets under administration (AuA). We also summarise aggregate subscription, redemption and performance figures for our clients’ funds. It was therefore a logical next step to apply the same rigor and controls to repackage a subset of this data into consistent, timely indices focused on capital movements for administration clients. Later this year, we anticipate adding further indices, including performance measurement.”
The first two Indices will provide monthly reports based on actual and anticipated capital movement data independently collected from all hedge fund clients for whom GlobeOp provides administration services.
While individual fund data is anonymised by aggregation, Index data will be based on the same reconciled fund data GlobeOp uses to produce fund net asset value (NAV) reports. GlobeOp’s total assets under administration represent approximately eight to 10 percent of the estimated assets currently invested in the hedge fund sector. The investment strategies of the funds in the Indices span a representative industry sample.
On the eighth business day of each month the GlobeOp Capital Movement Index will report on investments, or capital movements, into and out of hedge funds on the GlobeOp administration services platform.
· Data is based on actual subscriptions and independently calculated and confirmed from real capital movements, and published only a few business days after they occur
· The GlobeOp Capital Movement Index consists of the cumulative monthly net of subscriptions to and redemptions from hedge funds administered by GlobeOp, divided by the total assets under administration (AuA) for GlobeOp’s administration clients. The Index was set at 100 on December 31, 2005.
· Data for middle-and back-office clients who are not also fund administration clients is not included in the Index, but is included in the company’s results announcement figures
· Online data can be segmented by a range of gross and net monthly flow criteria
· The first monthly GlobeOp Capital Movement Index will be published on April 12, 2011.
On the 15th business day of each month the GlobeOp Forward Redemption Indicator will report on investor redemption notifications to hedge funds on the GlobeOp administration services platform.
· The GlobeOp Forward Redemptions Indicator consists of the redemption notices received from hedge funds administered by GlobeOp, divided by the total assets under administration (AuA) for GlobeOp’s administration clients
· Data is based on actual investor redemption requests received. Investors may, and sometimes do, cancel redemptions notices. In addition, the establishment and enforcement of redemption notices may vary from fund to fund. The establishment and enforcement of redemption notification deadlines may vary from fund to fund.
· Data for middle and back office clients who are not also fund administration clients is not included in the Index, but is included in the company’s results announcement figures
· Online data can be further segmented by redemption periods ranging from less than one month to more than three months
· The first monthly GlobeOp Forward Redemption Indicator will be published on April 21, 2011.
Commenting on GlobeOp Hedge Fund Index methodology, Tony Glickman, GlobeOp managing director, added, “The Indices were welcomed in the trial phase by fund managers, asset allocators, fund investors and academics as providing valuable, independent data points. Because data is calculated by GlobeOp across all our active administration clients each month, at the same point in time and using consistent mathematical methodology, the self-selection and self-reporting biases of many other indices are eliminated. In addition, because data is reported within days of the business month-end close, the delay factor inherent in some other indices is eliminated. While protecting the confidential details of our individual clients, the Index also benefits from the same data processing rigor and controls that we apply to producing regular portfolio valuations for our clients. That process is included in GlobeOp’s annual ISAE 3402 and SSAE 16 examinations.”
Dr William Fung, visiting research professor of Finance, Hedge Fund Centre, London Business School, said, “Central to hedge fund research is the relationship between performance and capital flow. Understanding this relationship is key to answering important questions such as the effect of liquidity in hedge fund investing and the interplay between capacity and future performance. Research progress into these critical questions has historically been handicapped by the lack of reliable, unbiased data. I applaud GlobeOp for its efforts to create an objective, dependable data source in this area and very much look forward to studying the GlobeOp Capital Movement Index in the near future.”