U.K. fund manager Friends Ivory & Sime, with GBP37 billion (USD52.8 billion) under management, plans to ramp up its use of equity derivatives to enter or unwind positions and is looking to recruit a derivatives manager to handle the additional business. Ian MacFarlane, head of strategy in London, said the manager wants to use derivatives to temporarily change its level of participation in indices. If it decides to extend the maturity of a position it will gradually replace the derivative position with cash, allowing for better execution.
An example strategy the fund may use if it is predicting strong U.S. growth would be to buy futures or calls on the Standard & Poor's 500 index and then move cash into the sector, MacFarlane said. He added it will only use index derivatives rather than options on individual names. The fund will use listed options so has not selected counterparties.
MacFarlane expects the new recruit to be on board in three to four months. The derivatives savvy recruit is likely to come from another fund manager and have five to seven years of experience. The fund manager is hiring the individual now because MacFarlane has identified this as an area for potential savings. He joined the firm eight months ago from BNP Paribas, where he was head of European equity strategy.
