Balancing Innovation and Risk Through Enhanced Derivatives Governance

Geoff Cole and Jackie Colella, Sapient Global Markets

Typically considered an instrument reserved for hedge funds and complex investment strategies, derivatives are becoming far more common today within investment portfolios. Desire for benchmark outperformance and product differentiation in a crowded marketplace has led to a marked increase in the use of derivatives within US mutual fund products and newly marketed funds that cater to the needs of the retail and institutional investor communities.

With growing competition, the shift from passive to active management, and new regulations for fund transparency…

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