Hamilton Investment Management will likely enter total-return swaps and purchase credit-default swaps when its nascent Hamilton Convertible Opportunities Fund increases its assets under management. Any decision on when the fund is large enough to make derivatives trades would be at the discretion of counterparties, said an official in New York, who was unable to estimate the size.
It would likely enter total-return swaps for technical reasons, for example, when it is hard to borrow securities, while it would buy credit-default swaps for hedging and speculative purposes, he said.
Hamilton Convertible Opportunities Fund replicates the convertible bond-based strategies of the firm's flagship Hamilton Multi Strategy Fund, which has USD220 million in assets, said the official. These strategies include convertible arbitrage, credit and pair trading. Bear Stearns is the prime broker, but Hamilton has relationships with six other counterparties.
