​Equity Hybrids In Spotlight As Rate Hike Looms

While U.S. interest rates and equities have gone from decades of negative correlation to predominantly positive correlations over the last 15 years, they have briefly dipped negative twice in the last two years. This has in part driven an increase in hybrid options as insurance firms and pensions seek to buy that correlation, while hedge funds take the other side of the market. Daniel O’Leary talks to senior buyside and sellside officials on the current suitability for hybrids as the U.S. stands on the brink of a rate hiking cycle.