The USD11 billion Ford Foundation is considering changing investment guidelines to allow a broader use of derivatives. The guidelines prohibit the use of certain derivatives strategies that lend themselves to more sophisticated equity and bond management. At the moment if a manager wants to use interest-rate swaps, for instance, the board needs to grant a one-off exemption, said CIO Linda Strumpf.
The foundation is considering changing its guidelines to allow fund managers to use listed options and futures without having to request board approval every time. It has become more common for fund managers' lawyers to request in the investment manager agreement or partnership the permission to use futures, options and swaps. Strumpf doesn't know for sure if the guidelines will be changed; changes have to be approved by the foundation's president and its treasurer, among others.
