Financial Index Futures for Businesses

Helping managers manage more effectively.

Institutional money managers manage millions, sometimes billions of dollars of client assets. As such, their portfolios often hold relatively large positions in individual stocks as compared to individual investors. If a manager has near-term concerns regarding equity markets in general, selling his or her entire portfolio of assets and buying them back at cheaper prices would represent a costly and  hence a fairly unattractive option. For one, the transaction costs associated with such a strategy would simply erase the advantages in the strategy.  Secondly, the “dumping” of thousands of shares of securities on the market would be very disruptive.

Financial index futures are an effective tool for managing and modifying equity market risk because they allow a portfolio manager to buy or sell the entire market index in a single transaction with minimal transaction costs and market impact.

The Burak Hannon Brojde Group works with a variety of institutional money managers including pension fund managers, mutual fund managers, investment counsels, hedge funds and charitable foundations to help them devise strategies using financial index futures that can help them manage their portfolio of equities more effectively.