A growing gap


Hedge fund derivatives are garnering strong interest from banks and investors. In the most recent incarnation, dealers have created options linked to the net asset value (NAV) of a hedge fund as part of employee compensation schemes. Rather than traditional employee stock option programmes, which allow employees to buy shares of their company at a pre-agreed price once their options vest, hedge fund employees are instead given a warrant on shares of the fund's assets. The benefit for hedge f