Surveying the global structured finance landscape is necessary for every portfolio manager to undertake. This process allows you to make better, more informed decisions. It helps you find the right investment managers and teams to manage your mandate and gives you a clearer idea of the industry's current landscape.
If the world has emerged from the worst financial crisis, it is time for the global structured finance industry to step up to the challenge. Market players have several opportunities to play a vital role in cleaning up the financial markets. A significant transformation in the securitization landscape is underway. In particular, the transition from US dollar LIBOR to alternative reference rates will require enormous effort. The challenges associated with this transition compound the industry's already complex issues. To prepare for the shift, securitization market participants must first consider the extent to which they are exposed to the LIBOR market. They must also evaluate their fallback contract language and timing. In addition, they must also consider the effects of the transition on the valuations of existing LIBOR-based portfolios. As a result, industry groups are now working to drive consistency in using fallback language between asset classes. As the world continues to shift to a cashless economy, payment service providers are reshaping the entire infrastructure with new business models. The interoperability layer is an integral part of this transformation. First, it is an umbrella for standards, protocols, and other guiding principles. These include but are not limited to, the APIs and digital tokens that enable core participants in the trade ecosystem to interact. While there are some building blocks in the market, a full deployment of the interoperability layer would be a structural change to the financial industry. This may take five to ten years to realize fully. Banks and other payment service providers must ensure global transparency to benefit from the interoperability layer. They must also create trust with their clients and establish a global supervision structure. Investing in the private market has the potential to be a powerful diversified against risk. Whether because of a high entry barrier or inefficient market dynamics, private investments can provide an opportunity for investors looking to maximize returns and minimize risk. Structured credit is a fixed-income investment that spans a broad spectrum of asset-backed securities. These investments are subject to credit, liquidity, and interest rate risks. They can also result in reinvesting proceeds at less favorable terms. Incorporating risk reduction into your asset allocation strategy is critical to building a solid portfolio. Portfolios that include more low-correlation assets are more diversified. But it's important to remember that there's no such thing as a "zero-correlated" investment. This means that the correlation between investments can vary from short-term to long-term and high to low. Asset management firms provide services to individuals, institutions, and government entities that want to manage their financial assets. Asset management's goal is to increase a portfolio's value over time while minimizing risk. These firms may focus on passive investing or value investing. They also may bundle other services such as insurance and retirement plans. Some firms specialize in hedge funds. To choose an asset management firm, you'll need to determine how much risk you are willing to take. This depends on your income level, liquidity needs, and tax situation. You'll also need to understand the types of investments the asset manager can invest in. For example, you'll need to know whether the manager can invest in bonds, commodities, and alternative investments.
0 Comments
Leave a Reply. |
|