Titan Capital Group is to begin trading volatility on FX and fixed income products with a new fund structured to allow investors exposure to its underlying assets.
Salvatore Rubino, who has successfully traded for approximately 13 years and comes to Titan from CSFB where he successfully ran FX Volatility trading out of Asia, and James Xu, who has a PhD from Yale and has worked in Fixed Income for over 12 years, have been appointed to lead the new initiative.
"We are extremely excited to have these top individuals join us to exploit the opportunities in trading volatility on these assets created by the dominance of directional trading by market participants,' says Portfolio Manager Russell Abrams. 'In addition to the opportunities created by directional players, these funds should deliver significant outperformance during periods of distress in the Fixed Income and FX markets."
While many hedge fund strategies have suffered losses in October, Titan, which manages one of the largest volatility arbitrage hedge funds in the world, posted gains for the month ranging from +1.5 per cent to 6 per cent in its various products. Historically Titan's funds have performed positively in approximately 85 per cent of those months when the CSFB Hedge fund Index is down.
Although Titan suffered some losses in the first half of the year, in late July it made certain modifications to its trading strategy that Abrams believes should take advantage of the unjustified risk many hedge funds have taken on in order to generate returns at any cost. The last time Titan modified its strategy was at the end of 2001, a difficult first year after its launch, and the firm went on to deliver 21 per cent returns for its clients in 2002.
In addition to its strategy modifications, Titan also believes that electronic trading of single stock options presents the firm with exceptional opportunities. According to Abrams, one historical problem with single stock option trading has been the extremely wide bid/ask spreads. When these costs are factored in, trades previously viewed as profitable are often no longer feasible. However advances in technology along with a newfound willingness on the part of investors to trade single stocks electronically has created new opportunities.
As well as investing in new technology resources to full take advantage of these new opportunities Titan has appointed Mark Neuberger, a widely known 23 year veteran of Morgan Stanley to lead the firm's single stock option trading initiative.
As Managing Director at Morgan Stanley, Neuberger ran US equity option trading and was the most senior trader in the equity division, representing the equity division in weekly risk meetings.
Additionally Titan has added two veteran electronic option traders, Robert Ross and John Barbaro, who each have approximately six years experience trading options utilising the electronic platform.