Australian institutional fund managers running superannuation fund money are making very high use of derivatives instruments via the two active markets.
The finding comes from a recent survey by the Australian Investment Managers Association that suggested recent adverse publicity had not diminished fund managers' enthusiasm for derivatives.
The Australian managers made much more use of traded derivatives - futures contracts traded on the Sydney Futures Exchange and options and warrants traded on the Australian Stock Exchanges - than over-the-counter local and international derivatives.
The survey found 91% of AIMA members used SFE share price futures contracts and 88% used SFE bond futures and options on futures.
The percentage of managers using ASX equities options contracts was 81%, while 71% used SFE 90-day bill futures.
For international futures and options over equities, the level of usage was 58%, while 41% used OTC equity derivatives.
Other less popular contracts were ASX share warrants and SFE share futures. Neville Page, chief investment officer of Commonwealth Funds Management, was enthusiastic about the forthcoming ASX share price ratios.
Share ratio warrants essentially strip out the market risk and allow fund managers and investors to back an individual share to under- or outperform the share market index.
