Fund derivative considerations in the current market

FUND DERIVATIVES

Each passing week brings fresh stories analysing the latest implications of the collapse of the United States sub-prime credit market. Although it is still difficult to gauge the full extent of the turmoil, two things are already clear in the fund derivative market.

First, leverage providers to funds and funds of funds are in a much stronger negotiating position because fewer providers are prepared to lend. Second, and not entirely unrelated, funds and financial institutions acting on their behal