The world of investment management is changing with absolute-return strategies, portable alpha, hedge funds and yield enhancement an integral part of the everyday life of traditional portfolio management, according to TABB Group in its newest benchmark industry study.
In “Exchange-Traded Equity Derivatives: The Buy-side’s Increasing Exposure,” the group wrote that these changes are creating a seismic shift not only in the way exchange-traded equity derivatives – futures and options – are used but also in who trades them and how they are traded.
“As an increasing number of traditional fund managers migrate from long-only to 120/20 and 130/30 portfolios and become more adept at managing risk, employing absolute return strategies and extending leverage, derivatives will become a more important part of traditional investment strategies,” wrote Andy Nybo, senior analyst at TABB Group and author of the study. “As this evolution occurs, institutional investors will have a greater need for a host of tools and services designed for the intricacies of the derivatives market.”
Increased use of technology, specifically leveraging electronic connectivity, will be a prime driver of future change in this global asset class, he said.