PlusFunds.com is a recently announced internet site that was created in a cooperative venture with Standard & Poor's, Ernst & Young, Advent Software, Inc. (Nasdaq:ADVS), RiskMetrics, and the Bermuda Stock Exchange to serve three functions: 1) Provide real time, tick by tick NAV's (Net Asset Values) of hedge fund shares 2) Provide a variety of daily risk measures including VAR's (Value at Risk), historical portfolio shocks and concentration analysis of hedge funds and 3) Create a secondary market consisting of standardized and securitized shares in hedge funds participating on the PlusFunds.com platform. The site operates in ten languages (Arabic, Chinese, English, French, German, Italian, Japanese, Portuguese, Russian and Spanish) and is free of charge for accredited investors. To date, the site has registered over 2500 accredited investors from around the world. Over 40 hedge funds have chosen to participate in the platform, which is expected to go "live" in March, 2000. Electronic trading will take place on the Bermuda Stock Exchange in a market that is accessible by all time zones. In this manner, all investors can meet on a common exchange platform to conduct their secondary market transactions in hedge fund shares thus enhancing liquidity and fostering pricing efficiency from counterparts around the world.
Sarah Street, Managing Director of Chase notes "The PlusFunds platform has the potential to transform the industry. We see it holding considerable benefits for the hedge funds, their investors, bankers and trading counterparts. It's not that it puts more information in the hands of those on the "outside". It's the right information, the right transparency. PlusFunds should give investors and fund counterparties information that is truly useful whilst protecting what is proprietary to the managers."
To date, hedge fund market participants have had to rely on net asset value calculations delivered once per month by the hedge fund managers. In addition, never before has risk information been provided in the hedge fund market. Stephen Liot, Global Head of Funds Derivatives of BNP in Paris states "PlusFund's delivery of increased transparency and liquidity enables the development of more efficient and cost effective structures linked to alternative investments" Moreover, with the liquidity provided by the secondary market, it will be easier to rebalance a portfolio in a specific way by selling hedge fund shares concentrating on one given strategy, and buying shares in another that is deemed more favorable in the prevailing market.
Jim Vos, Managing Director of CSFB plans to utilize PlusFunds real time information and liquidity structure to develop product for CSFB's institutional clients. "We will also be brokering shares of funds on the PlusFunds platform on behalf of our institutional clients. This is the first time there has been the opportunity to freely trade shares in hedge funds. Until now, it was only really possible in the primary market, within the limitations of the subscription and redemption periods, and impeded by lack of up to date 3rd party information on the fund."
JP Morgan's Christian Frei, Vice President of Investment Management adds " As an adviser to high net worth clients and manager of Funds of Funds the platform is in the first instance a user friendly and more transparent means of gathering information about hedge funds. More importantly though, as an existing or prospective investor, it enables one to get more frequent and reliable pricing of hedge fund positions with a high standard of risk analytics. While there is no substitute for good due diligence to determine manager quality, this is a critical step closer to help us or other investors figure out which hedge fund managers to invest with".
According to John McClave, Executive Vice President of Mitsui & Co. Commodities Corp. "PlusFund's core features of transparency, risk analysis and liquidity address the primary issues of Japanese Hedge Fund investors. We plan to utilize the PlusFund's platform as a value-added management tool to develop cutting edge products."
Finally, in its use as a direct product, institutions will broker the shares in the hedge funds operating on the PlusFunds.com platform in the secondary market of the Bermuda Stock Exchange. In the scheduled March launch, CSFB, Nomura will broker the shares in hedge funds participating in PlusFunds.com's platform. "PlusFunds.com and the Bermuda Stock Exchange provides a new and exciting opportunity for our clients to trade hedge funds" said Patrick Churchill, Head of Sales, Nomura Securities (Bermuda) Ltd.
About PlusFunds.com
PlusFunds.com is the first independent marketplace (electronic or otherwise) for the global hedge fund industry. Providing a combination of real-time, tick by tick valuation data in an "engine" created by Ernst & Young and Advent Software, Inc. (Nasdaq:ADVS), in combination with independently verified and published risk measurements provided by Standard & Poor's, and global, 6-day-week, 22-hour-day trading through the Bermuda Stock Exchange, PlusFunds.com is positioned to quickly increase the market potential of the hedge fund industry manifold. Presently, some 43 funds, representing some $20 billion capital, have agreed to join the PlusFunds.com platform.