State Street Global Advisors, which manages USD25 billion in global fixed-income and cash from its London office, is planning to use over-the-counter and exchange-traded interest-rate options and options on bond futures for the first time as part of its global fixed-income portfolio management strategy, according to DW sister publication BondWeek. Vincent Kok, head of global fixed income, said the firm decided to start using options as an asset class to garner extra returns beyond its benchmarks as well as to get away from pure market directional investing and to mitigate volatility. Kok said SSgA's U.S.-based managers already use options and now this practice is being expanded globally.
SSgA plans to start using options by the first quarter and performs its own risk analytics, said Kok, who declined to say if the firm has chosen counterparties for OTC transactions.
As part of this new effort, SSgA has bulked up its investment management team in London with two hires to cover global fixed income, said Kok. Kevin Anderson, previously a quantitative analyst at Schroder Investment Management in London, will be responsible for monitoring the options market as well as options-related research projects, said Kok. Anderson will also be involved with running SSgA's European duration model and specific country coverage. Anderson will work with another portfolio manager, but Kok will be ultimately responsible for options-related investment decisions. Anderson did not return calls.
Joseph Moody joins from F&C Management in London where he was an assistant director. He will be responsible for the U.K. and Scandinavian markets and will also have joint responsibility for the global model portfolio and the U.S. duration model for U.K. clients. "They are much-needed extra pairs of hands," said Kok of the new hires.
Anderson's duties at Schroders are being assumed by Minh Pham, said Bernard Abrahamson, executive director of fixed income. Calls to Deborah Jones at the F&C press office were not returned.