Can state run pensions use derivatives?

Discussion in 'Trading' started by Sioux, Sep 5, 2006.

  1. Sioux


    Does anyone know if public pension funds(like State University Retirement Systems, SURS) use derivative products?
    I know that they are NOT allowed to use derivatives as a speculative investment...but how about to hedge.

    Eurodollar futures to hedge Fixed Income portfolio?

    or FX Futures to hedge their Foreign Equity exposures?

    Anyone care to share their expertise on this subject?

    I know there are strict laws rules that apply here but I can't seem to find anything on the web. Is this a federal thing or does it vary from state to state?


  2. I think the answer is yes. Put in Google "Orange County Derivatives". About 10 years ago Orange County, California started investing in derivatives and earned plenty early on. Many municipalities followed suit without understanding the risks. When the market went the other way, billions were lost.
  3. I know that the New York Teacher's Pension invests in Venture Capital... only a very small portion is allocated to such 'risky' investments, but they do certainly invest in them. As for actual derivatives, I would have to assume so.. even speculatively.