Saturday, August 14, 2010

Can CFD's provide an efficient hedge for equity portfolios?

With the decline of confidence in a US recovery SMSF equity portfolios are expected to decline. Can selling OTC index contracts provide an efficient hedge?
There are a number of reasons for a qualified answer. Transaction costs. leveraged exposure to volatility, margin requirements, counter party risk and system risk.
Is there any other insurance like product that provides a similar risk management solution?