Record growth in dividends welcomed

The record number of dividend-based deriviatives traded on Eurex has been welcomed as it will deepen liquidity and encourage other exchanges to trade these contracts.

Jad Comair, founder and chief invesment officer of Paris-based Melanion Capital, says : “The large volume increases we’re witnessing in the sector are good for our investors, not only because of an increase in liquidity but also because they will encourage further diversification as new exchanges enter the marketplace and new contracts are launched. ”  

According to Eurex, September’s monthly trading was a record high of 989,000 contracts representing an increase of 52% year-on-year.  

Dividend derivatives trading splits into indices and single stocks. During September, open interest in Eurex dividend indices grew to over 3.5 million contracts and open interest in single-stock dividend futures grew to some 1.6 million contracts.

The volume of Vodaphone dividend futures changing hands as the company announced the sale of its large stake in Verizon Wireless helped growth.

“Because they’re simple, easy to understand and answer investors’ needs to hedge their dividend exposure, dividend futures have become one of the few highly successful new contract segments launched by derivatives exchanges in the past few years,” says Comair.

Melanion recently launched launched the first dividend futures fund. Amundi this week also launched what it says is the first global implied dividend fund.

©2013 funds europe

HAVE YOU READ?

THOUGHT LEADERSHIP

Innovative US companies are providing some of the solutions to the climate crisis and transition to a more sustainable economy. We see potential opportunities in areas including renewable energy and…
FIND OUT MORE
This white paper outlines key challenges impeding the growth of private markets and explores how technological innovation can provide solutions to unlock access to private market funds for a growing…
DOWNLOAD NOW

IRELAND SPOTLIGHT

Visit our dedicated Ireland channel for all the latest news and analysis on the country's investment industry.
READ MORE

PRIVATE MARKETS FUND ADMIN REPORT

Private_Markets_Fund_Admin_Report

LATEST PODCAST