Aiming to capture a bigger share of the burgeoning business, Chase Manhattan Corp. has expanded its managed fund group to handle derivatives investments for sophisticated investors.
Bank executives said they will expand fund management in listed commodities and foreign exchange related products for 14 funds that specialize in futures contract investing.
Interest in commodities and foreign exchange among investors hoping to profit from market volatility and a rise in prices has grown sharply since the downturn in the bond and equity markets began earlier this year.
J. Anthony Wallace, senior vice president in charge of Chase's managed fund group, said the bank expects to more than triple its pool of futures investments to $1 billion within three to five years.
"The managed futures trading industry is mushrooming," Mr. Wallace said. "People are looking at other asset classes since they've started to feel that the excellent returns from fixedincome and equities are not repeatable over the next few years."
The pool was set up five years ago and is one of the few units Chase retained after it sold off its institutional money management business to Union Bank of Switzerland in 1991.
The funds, with more than $300 million, are traded daily and posted a 7% composite return since the start of the year, according to a spokesman for the bank. Mr. Wallace estimated that managed funds, or funds specializing in future contracts, now total around $32 billion globally. Six of the Chase funds are managed on behalf of Japanese institutional investors, including securities firms and consumer finance groups. The remainder are managed for U.S. employee retirement groups and international private banking clients. The Chase funds guarantee a return on principal by buying zero coupon U.S. government bonds at a discount and using the balance for trading. The trading is managed from outside the bank, with Chase providing settlement services.