Gulf International Bank is planning to launch a U.S. long/short equity hedge funds that will use over-the-counter derivatives. Mohab Mufti, head of financial markets in London, said it expects to launch the fund in September. David Bailey, funds product manager in London, added that the fund will be permitted to write covered calls and puts and sell options to capture premium after periods of excessive volatility. Bailey expects the fund to manage USD20 million.
GIB is launching the fund as part of an ongoing process to develop its alternative investment product range in response to customer demand and as an attempt to leverage off the bank's proprietary trading activities. The bank already has a U.S. and European high-yield fund, an emerging markets fund, a relative value equity fund and a futures and foreign exchange fund. Bailey said none of the existing funds use OTC derivatives. The funds vary in size from USD23-USD100 million.