Greenwich Alternative Investments manages one of the world's largest hedge
fund databases and is among the oldest providers of hedge
fund indices, asset management services and research to institutional investors worldwide.
For example, you might have a policy to hedge
up to 100 percent of your six-month Fx exposure, with the flexibility to only cover 75 percent.
timing rules, however, preempt the normal rules and would require the spread of gain over the term that the debt was hedged.
funds aren't required to report returns, generally don't have to disclose their security holdings and sometimes lock up investors' money for a year or more, Because these funds are private, they have tremendous flexibility in the investments they can make and the strategies they can follow.
In addition, the final regulations take account of the many taxpayer and practitioner comments--especially in respect of the treatment of hedges
of non-inventory supplies--and, as a result, represent an improvement over the temporary and proposed hedging regulations.
fund might not exhibit all these characteristics all the tiem, and other financial institutions also exhibit many of these characteristics.
Using rules to avoid the cost of active hedge
fund management is the same principle that helped passive index funds (such as ETFs) gain market share from actively managed mutual funds," said Heiko Ebens, head of the Americas Equity Derivatives Research team at Merrill Lynch.
Aggressive, because Porsche relies heavily on options to hedge
100 percent of its currency exposures over a five-year time horizon; conservative, because the option hedges
eliminate the risk of currency market shifts marring Porsche's competitive game plan.
A derivative that qualifies as a hedge
gets special accounting treatment that essentially matches gains or losses resulting from the changes in the value of the derivative with losses or gains in the value of the underlying transaction.
As the Amaranth story broke, at least one reinsurer warned investors it expects losses on hedge
fund investments to impact third-quarter results, without specifying the source of those losses.
Options are a popular technique when the company does not want to commit to a hedge
position or is concerned about lack of an off-setting accounting gain/loss.
In these instances, it may benefit front a comprehensive review of its hedge