Figures from the second quarter show that hedge funds are still nowhere near returning to their peak - despite some predictions that the industry would soon be back to form, the latest quarterly index from secondary hedge fund market provider Hedgebay Trading Corporation depicts a slow recovery.

On the upside, secondary market data for the second quarter showed the average price for hedge fund assets rose for the first time in seven months during April, and continued to rise in May. Improvement continued up to June as the average discount fell to 8 per cent, from a 20 per cent peak in March.

However, the trend did not continue as discounts picked up once more throughout June. According to Hedgebay there are two main reasons why the market is struggling for liquidity: discrepancy in valuations between buyers and sellers, and reluctance to trade at very large discounts.

“A large proportion of the rise in the average price of sales is due to the trading of funds whose underlying assets are generally liquid and performing well," said Elias Tieta, co-founder of Hedgebay. “On the whole, trading patterns indicate that investors do not believe the fundamentals of the market have changed. There are still a significant amount of illiquid assets on the secondary market that investors will not raise their bid levels for,” he added.