Wednesday, September 17, 2014

Derivative Active Substitutes

On the horizon, changes to passive investing.  

"Pimco in May said that interest rates in the U.S. will remain lower than they had been before the financial crisis, as the economy enters a “new neutral” characterized by global growth converging toward lower, more stable speeds. The Newport Beach, California-based firm is recommending that clients consider strategies implemented with futures, options and swaps to lift subpar returns." By Miles Weiss and Susanne Walker , Bloomberg. 

To "lift" returns across all asset classes, the increasing trend will be for traditional passive management operations  to turn to trading strategy derivative firms using black box and grey alpha generators.