I'm interested to see if Any hedge funds use...

Discussion in 'Educational Resources' started by primebrkr, Jun 23, 2006.

  1. ...any "structured products" to hedge their strategies or to act as "principle protection" with an added opportunity to gain on any upside opportunity the specific instrument offers. I just did a $6 million dollar project for a small fund in Florida and have been getting more inquiries from other funds who want to explore utilizing them "if" they fit into their overall strategy?

    I know this might be a longshot but I would love to hear from any micro-fund to large fund managers (if any are really on this board) strategies in utilizing these products? What do they look for? pricing? Or just general opinions.

    I realize they will not work for everyone but I'm simply surprised at the response we are getting recently.

    disclosure: I do work for a large wirehouse that does offer these products.

  2. Could you be a bit more specific as to what you provided your client? Your description is a bit too vague.
  3. cashonly

    cashonly Bright Trading, LLC

    WHen I worked at Merril in the equity derivatives group. They would have clients looking to have custom products to hedge their portfolio. The group would either find or create products to hedge each position in the portfolio and charge them appropriately based on the risk.

    Sounds like that's what you're talking about.

  4. This isn't related to hedge funds, but in Norway a variety of structured products are being sold by big banks to the unsophisticated investors. Basicly the products are a great way to hide costs, and offer a "safe" way to gain exposure to a risky bet. The principal is guaranteed, and since it's guaranteed the banks offer you a loan to gear up your investment 2 or 3 times. 3 times commission for closing the sale :) I have friends making loads of money from this.

    Thus with 100k cash you can buy for 300k in a structured product offering you a ROI based upon the change of say JPY/NZD over a 3 year period. The product is shit of course, but you have to understand the markets to figure that out.
  5. I work for Morgan and I just got off the phone with an I-banker, she manages asset's for 2 families; one in Asia and one in Canada. The Asian family is using these instruments to get exposure outside of Asia so we are creating a "basket" of instruments to give the client that exposure with some principle protection, it's not a new idea but it's still surprising to me how well it works for "some" not all. Obviously Cash you know what you're talking about at least, I actually spent some time at Merril as well, I came to Morgan as their desk on these type of products was deeper and their PB & Equity desk was superior, (IMHO).