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Displaying 10 out of 79 results for "Structured Products".

Derivatives in Active ETFs

Over two and a half years ago, the SEC initiated a moratorium on approvals for new ETFs that made extensive use of derivatives such as options and futures contracts. Much of the concern at that time was that derivatives-based ETFs, particularly leveraged, inverse, and futures-based ETFs may not have investor protections or oversight commensurate with their level of risk. Regular readers of this blog know that we have spent a good deal of time discussing those issues in addition to our ...

Massachusetts Securities Regulators Getting Tough on Non-Traded REITs

LPL Financial, the largest independent broker-dealer in the US, is being sued by Massachusetts securities regulators for "numerous regulatory violations in connection with the sale of non-traded REITs." We have covered non-traded REITs extensively on this blog, as well as in a detailed working paper, and it appears that many of the problems that have been identified with these products are finally attracting attention from regulators.

According to the complaint, the action is specifically...

Structured Products Highlight: Citigroup ELKS Linked to YAHOO!

Today we're highlighting a structured product issued on May 25, 2011 by Citigroup. This product (CUSIP: 17317U501) is an Equity LinKed Security (ELKS) linked to Yahoo! (YHOO).

ELKS are similar to reverse exchangeables in that the notes pay periodic coupons (monthly at an annualized rate of 9.50% in this case) and protect principal on a limited basis (if YHOO's price remains above the $13.08 trigger during the term of the note). In contrast to reverse exchangeables, once a trigger event occurs...

SEC Charges Morgan Keegan Directors with Failing to Oversee Asset Valuations

The SEC has charged eight former Morgan Keegan directors with failing to provide accurate valuations for mortgage-backed securities during the subprime crisis of 2007. We wrote a paper in 2009 explaining the collapse of the RMK bond funds and how they relate to these very same securities.

The mutual funds at issue are 1) RMK High Income Fund, Inc.; 2) RMK Multi-Sector High Income Fund, Inc.; 3) RMK Strategic Income Fund, Inc.; 4) RMK Advantage Income Fund, Inc.; and 5) Morgan Keegan Select...

Deliverable Interest Rate Swap Futures

Interest rate swaps are important tools used by many financial and non-financial firms to manage their interest rate exposure. Earlier this week, the CME Group launched a new derivative product called Deliverable Interest Rate Swap Futures with the contention that the product offers "maximum efficiency for managing interest rate exposure." This move is close in spirit to the recent move by the Eris Exchange to offer interest rate swaps on an open exchange. Both of these products are designed...

PowerShares to List Actively Managed Downside Hedged S&P ETF

Late last week, Invesco PowerShares filed a form N-1A registration statement with the SEC to list an exchange traded fund (ETF) with exposure to the S&P 500 with downside exposure actively hedged through VIX futures contracts. The PowerShares S&P 500 Downside Hedged Portfolio (PHDG) seeks to "achieve positive total returns in rising or falling markets that are not directly correlated to broad equity or fixed income market returns" and has annual operating expenses of about 39 basis points....

Structured Products Highlight: JP Morgan Reverse Exchangeable Linked to Ford

Today we're highlighting a structured product issued on January 19, 2012 by JP Morgan. This product (CUSIP: 48125VHZ6) is a Reverse Exchangeable linked to Ford Motor Company (F). Investors who purchased the notes were exposed to the possibility that JP Morgan would default on the obligations spelled out in the note's offering documents.

This particular note offered investors monthly coupons at an annualized rate of 11.25% for the six month term of the note. If, during the term of the notes,...

Attractive Yields and Hidden Risks

The Wall Street Journal had a great piece this weekend concerning the investments some investors are seeking out to find yield in this low interest rate environment. Investors are taking on more and more risk to realize the yield they once found commonplace and this article brings a few examples to the forefront.

The risk investors are taking include credit risk (high-yield/junk bonds), market risk (closed-end funds trading at a premium) or some combination of the two (structured products)....

Importance of Timing in Structured Products

We've been looking through some historical issuances of structured products recently and we happened to come across a peculiar product issued by Morgan Stanley in September 2008. The product (CUSIP: 617483664) offered investors bearish exposure to the S&P 500. In other words, if the S&P 500 level declines as of the valuation date of the notes, then the product would exhibit a positive return.

Not only was the return positive if the S&P 500 went down, but it was leveraged six times -- capped...

Structured Products Highlight: UBS Autocallable Linked to JOY

Today we're highlighting a structured product issued on July 25, 2012 by UBS. This product (CUSIP: 90269T574) is a Trigger Phoenix Autocallable Optimization Security linked to Joy
Global Inc. (JOY). Since this product is issued by UBS, purchasers of the notes were exposed to the possibility that UBS would have been unable to meet the obligations spelled out in the note's offering documents.

This particular note offered investors quarterly coupons (annualized rate of 12.84%) if JOY's stock...

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