Through a combination of using derivatives and absolute return strategies (external managers, insurance linked securities and systematic quantitative strategies), we can help manage how the Fund reacts to market swings, known as volatility, and help maintain liquidity.

Derivatives are financial contracts that derive their value from an underlying asset (for example, an index, interest or foreign exchange rate) and are used by HOOPP to manage risk. Common derivatives include futures contracts, options contracts, and swaps – generally, these are agreements between two parties to buy or sell an asset (stock, commodities, cash flows, etc.) at a specific price on a specific date in the future.

Absolute return strategies are investment strategies aimed at generating returns in all market environments. They use derivatives as a key tool in how portfolio risk is managed.

As a necessary part of HOOPP’s daily fund management operations, we manage HOOPP’s liquidity, match assets to liabilities and reduce credit risk in our lending activities.

Key elements of our portfolio include:

Learn more about HOOPP’s derivatives portfolio and our investment performance in our latest Annual Report.