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Derivatives

Telecom Pension Fund Eyes Options Debut

Telstra Super, the Melbourne-based pension arm of Aussie telecom giant Telstra Corp., is considering using options to hedge a portion of its equity portfolio for the first time.

Telstra Super, the Melbourne-based pension arm of Aussie telecom giant Telstra Corp., is considering using options to hedge a portion of its equity portfolio for the first time. The fund, with AUD7.8 billion (USD5.41billion) in assets, is currently reviewing its asset allocation strategy and may use over-the-counter or exchange-traded equity options to either hedge existing positions or as part of a rebalancing effort, according to Steve Merlicek, cio. Merlicek added that given the low volatility in the equity market and that the fund has recently established systems to handle such products, the fund could enter option trades within six months, though he noted it is too early to further detail such trades.

The fund has spoken to several derivatives shops, including ABN AMRO and Citigroup, in regards to option trading, Merlicek said.

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