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Article: Mutual funds' derivatives dilemma.
- Article from:
- The Economist (US)
- Article date:
- September 3, 1994
CopyrightCOPYRIGHT 1994 Economist Newspaper Ltd. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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AMERICA'S $2 trillion mutual-fund industry is no stranger to controversy. Earlier this year, some of its most illustrious names were embroiled in a row over the conflicts of interest involved in own-account trading, when fund managers buy stocks for their own account as well as for those of clients. The industry agreed to restrict the practice. But it is now in the dock once more. In recent weeks, several companies have bailed out mutual funds that had lost money using derivatives--instruments such as futures and options whose value is partly determined by that of a stock, bond or other underlying asset.
Mutual funds' use of derivatives is hardly new. Many of them ...