Portfolio managers in the Nordic region see an increasing need for derivatives in their business. The reasons for this are many and vary extensively between different institutions.

More and more fund managers start to realise that it is getting harder to keep up with competitors without access to all available investment instruments. There are colleagues out there that create additional returns or lower risks through derivatives positions. Hence, derivatives play an increasingly important role for fund managers trying to deliver good and consistent returns to their investors.

This according to a Master’s Thesis carried out for OMX Nordic Exchange by Carl-Henrik Lindberg and Johan Symmons. It shows that all interviewed institutions use derivatives, i.e. equity options or futures, to some extent, but the importance that derivatives are given in the overall investment process differs widely. A clear signal on this is that most institutions plan to increase their derivatives usage during 2006.