Creating a Growth Offset Instrument

This is often used where someone wants to define a benchmark of hurdle for a fund. For example Hedge funds often have a target return of LIBOR + some margin. This is done by showing relative performance.

In this example I will show you how to create LIBOR GBP 3 months +4%

 

To apply a growth rate to the LIBOR index, simply add the index to your active list and click on "create offset" under the Custom Instruments section.

 

A pop-up box will ask you to confirm if you would like to create an offset instrument of all selected instruments in your active list (this feature only works on funds, sectors and indices).

Clicking on "OK" will open the time lagged instrument setup page, whilst "Cancel" will abort the operation.

 

The offset instrument page is extremely simple to use. Just follow the 3 easy steps and click the save icon.

Note: You can apply a positive or negative growth % rate to an instrument. Simply enter 4 to apply a rate of 4% to your instrument, or -4 to remove 4% from your instrument.

 

Once the instrument is saved, your offset unit will be available to add to the active list via the custom instrument drop-down and the instruments will all end with "+/- x%". The number will change dependant on the +/- growth rate that you applied to the unit.

 

Now if you compare the LIBOR Index with our LIBOR +4% offset instrument, the results show the 4% relative growth.