Mostly… fixed income and cross product eTrading

August 11, 2007

Derivatives, again

Filed under: Nuts and Bolts — holky @ 5:12 am

In another update (following on from previous derivatives post) we learn that pension funds’ use of derivatives to hedge liabilities has trebled as managers become more adventurous in their attempts to reduce risk, according to two reports quoted by EFN

In terms of numbers, the Investment Management Association’s asset management survey showed the proportion of pension funds using derivatives or liability-driven investment strategies has tripled from 2.3% in 2005 to 6.1% last year, and a separate survey of FTSE 350 companies found the number of pension schemes using derivatives to hedge liabilities has trebled over the last year; interest rate hedging used by 18% of the survey’s respondents, and 17% using inflation hedging.

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