People who leave the White House end up working in all sorts of places, but not many of them land jobs at hedge funds. That, however, is the career trajectory of Todd Buchholz a former associate director of the Economic Policy Council during the Bush administration, who recently became the newest managing director at Tiger Management, the $7 billion hedge fund.

Buchholz, who helped formulate tax and trade policy for President Bush from 1989 to 1992, met Tiger Management's CEO Julian Robertson later while with the G7 Group Inc., a Washington-based consultancy founded by Buchholz, that advises institutional investors on economic developments. "Robertson challenges you to push your mind forward to develop new scenarios," explains Buchholz. "We had interesting internal debates that produced winning positions for the firm."

Buchholz's new job is to scour the world bond and currency markets for mispricings that could lead to trading opportunities. Soon after joining Tiger in March, he flew to Europe for a series of high-level meetings with government officials. He discussed the upcoming British general elections with Bank of England officials, Italy's debilitating debt burden with Italian treasury officials and the rally in French sovereign bonds with Banque de France governor Jean-Claude Trichet and Pamela Harriman, the U.S. Ambassador to France. "The investment business is about judgment," says Buchholz, "and trying to assess the accuracy of the markets' current view of a situation by sizing up relevant political, financial and economic developments.

Scores of derivatives salespeople spend their days trying to win the hearts and minds of pension fund sponsors. Nancy Nakovick, a former plan sponsor at NYNEX and Texaco, has a leg up on the competition.

In May Nakovick joined Société Générale as vice president of sales and co-head of research in New York for the Equity Derivatives Group. Her assignment: selling and structuring derivative strategies for pension funds, insurance companies and money managers. She will also be involved with pricing and structuring new products as well as sitting on Société Générale's pension committee.

Although many people would argue that the job qualifies for combat pay, Nakovick sees increasing interest in derivative strategies from her former pension fund colleagues. She sees significant growth ahead in listed and OTC options based on global indices and in equity baskets that allow pension plans and other institutional investors to hedge and tilt their portfolios. She's also getting good feedback on international equity-indexed swaps with returns protected from currency movements, structures that can also be used as an alternative to currency overlay strategies.

An MIT-trained mechanical engineer with a Wharton MBA, Nakovick has been dealing with derivative strategies since she first worked as a manager in the corporate finance group at NYNEX in 1987. She acquired both domestic and international pension management experience at NYNEX and subsequently at Texaco. Nakovick developed Texaco's asset allocation and risk management programs using options and futures and ran an approximately $200 million domestic equity portfolio in-house. In her most recent job she worked in equities derivatives research at Goldman Sachs. Nakovick reports to Jean-Marie Barreau, senior vice president and head of equity derivatives in New York.

When Doug Harris announced he was resigning from the Office of the Comptroller of the Currency (OCC) at the end of May, he left behind a small shelf of derivatives-related initiatives and pronouncements. Harris, 45, who was senior deputy comptroller for capital markets at the OCC, was responsible for many different aspects of banking and capital markets. His eye, however, was clearly on derivatives.

"The growth in derivatives required a special focus and policy response from the OCC," said comptroller of the currency Eugene Ludwig in reply to Harris's resignation. The central document in that initiative was "Banking Circular 277," which, like the G30 report of the previous July, outlined the risk management practices that banks need to adopt to conduct business in derivatives safely. A subsequent advisory letter on structured notes, sent to national banks in the summer of 1994, proceeded from Harris's belief that "some banks were having trouble with structured notes and did not understand the investments they had purchased."

But Harris was more than a simple nay-sayer. He gave national banks permission to use equity derivatives, and in one of his last acts in office, agreed to the formation of a derivatives products company (DPC) by NationsBank. Similar attempts by Citibank and Continental to form DPCs four years ago had foundered after running into OCC opposition. Harris attributes NationsBank's success to the facts that there is now a "better understanding of derivatives markets and derivatives products" than in the early 1990s, and that "NationsBank made an excellent case."

Harris says he is currently considering a number of positions in the private sector.

Investment managers spend their lives looking for companies with good five-year growth records. At Pareto Partners they need only look in the mirror. The firm, which started life in 1991 with zero assets and 25 people, now has $15.5 billion and 48 employees.

That's particularly good news for Lynne Minard and the other five members of Pareto's senior management group, chaired by Paul Dimitruk. In April Mellon Bank sold a portion of its holdings to EXEL Limited, a Bermuda-based excess property and casualty insurer, and to Pareto's senior management group.

Minard attributes the company's success to Pareto's foresight in identifying the need of expanding global tax-exempt funds for currency management. Pareto offers currency overlay strategies that actively adjust currency exposures, offering a potential return while protecting the base currency value of the invested portfolios. That combination is particularly attractive to U.S. investors who sometimes feel ambivalent hedging in a weak-dollar environment. Pareto might typically expect, over time, an average of 150 basis points per annum above a client's benchmark if the strategy is consistently applied. "Currency management has gotten a mixed reaction in the U.S., but there is a demand if you can do it successfully," says Minard.

To achieve these returns, Pareto managers feel they have honed a methodology using forward contracts, not options. The firm recently opened a new office in Sydney to help address global demand for currency and TAA products that are quickly developing in the region.

Minard worked at County NatWest in New York before helping found Pareto. Before that she spent 12 years at Bankers Trust in their investment management division which her husband, Frank, now heads. "I had a wonderful career at Bankers Trust, but being in a business with a group of people who selected each other is a lot different than joining a pre-existing corporate entity," says Minard.