Wachovia Securities plans to offer its first hedge fund-linked trades this month in the U.S., following the recent hire of a hedge fund-linked structuring team. Todd Steinberg, managing director and head of equity-linked products in New York, said John Service and Dan Glusker, who both joined the firm from RBC Capital Markets earlier this summer, have been preparing the infrastructure for the business since their hire.
As an AA rated firm, Wachovia is comfortable with the credit risk of the hedge fund-linked trades, with the activity further being attractive as a natural extension of its equity linked-business, Steinberg noted.
The activity will primarily comprise writing options on hedge funds as a means of offering principal protection or leverage, said Steinberg. The structures will be targeted at pension and endowment funds as well as private individuals, he added, declining to specify planned trades as they will be private placement structures.