Talenthedge To Launch New Hedge Fund Indices

by Carla Johnson, Investors Offshore.com

03 February 2006

This February, Talenthedge, a provider of Investable Hedge Fund Capacity Indices, will launch the Talenthedge Investable Hedge Fund Capacity Index 1 (TCAP1), as a data and trademark license product.

Talenthedge says it is pre-selling up to six investable hedge fund capacity index licenses, for the TCAP1 ($-class) index, each license representing up to $1bn to $5bn of instant hedge fund capacity.

TCAP1 is based on the proprietary Talenthedge database and index methodology TCAPQ(tm), a hedge fund questionnaire in check-list format, with 90 questions in five topic categories: performance, transparency, investment method, capacity, and business management. The evaluation weight per category ranges from 11.11% to 22.22%.

Talenthedge says it has received interest from several funds of hedge funds, who may subscribe a license to create index-tracking products. The number of available licenses is limited to a maximum of six: three licenses capped at $1bn cap, two at $3bn, and one at $5bn. The index license fee is 0.5% of index-tracking AUM and 5% of index performance.

A pro-forma TCAP1 index performance, based on the performance of the index constituents, will be available at the formal launch of the index. The pro-forma 2005 performance will be over 10%, as defined by the fund selection rules: minimum 10% net over the previous 12 months. (Talenthedge warns that pro-forma performance and past performance may not be an indicator of future performance.) The index has also a focus on liquid hedge fund "styles," with
a minimum style diversification as part of the index rules.

Talenthedge says that the client benefits to the TCAP1 index licensee are:

• Low-cost intelligence on high-capacity hedge funds: The index license fee is 0.5% and 5% performance, based on the nominal value of index-tracking assets. A monthly minimum applies.
• A dynamic, transparent, systematic, innovative strategy index: The best twelve to 40 hedge funds, as determined by the quarterly ratings and ranking through a TCAPQ questionnaire;
• A focus on performance: One index selection condition requires a minimum fund performance of 10% net over the previous 12 months.

NB: The information in this story is for general information purposes only. It is not intended to constitute investment advice, nor is it intended for solicitation purposes.

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