New York – There was news today that YouGov plc is launching a hedge fun, based on primary research ideas, with partners Four Capital (Investment Fund) and Numis Corporation (Investment Bank). The fund carries the name of The YouGov Alpha Fund. YouGov Alpha is a bespoke primary research subsidiary of YouGov. The fund will be open ended, and will be seeded with Sterling 25 Million ($50 million) and is seeking a listing on the Irish Stock Exchange.
The fund will be based upon the research of YouGov Alpha. The research firm specializes in providing online polling services for institutional money managers, making use of a consumer panel that consists of over 210,000 participants in the UK. YouGovAlpha operates exclusively in Europe, but YouGov has subsidiaries that provide online market research solutions in other parts of the world.
According to reports, the fund will be based on a pairs trading strategy, where the fund will bet on the spread between stocks/sectors rather than the overall market. While YouGov Alpha is best known for its bespoke primary research product, the firm also does syndicated research and generates indices. In conversations with the company, the firm indicated that the decision criteria for the strategies will be based on bespoke research of YouGov Alpha and the idea generation will be managed by Four Capital. The fee structure will be a standard 20% and 2% arrangement.
There have been other hedge funds that utilize third party research for idea generation, such as Marshall Wace, so this concept is not revolutionary. But the fund being based on third party bespoke research is an interesting twist. One concern that we have heard is the separation of the idea generation from YouGov Alpha. Just how these ideas will be isolated from the rest of the research product is difficult to gauge. This is not to suggest that there is any impropriety expected, but it does suggest that the name of the fund may be unfortunate. Existing clients of the research product may feel that there is a potential for a blurring of research ideas. As such, YouGov will need to have clear policies and procedures in place to provide this level of comfort.