Structured Products Group
What exactly are the functions of the structured products group? What are the hours like? Is it considered part of the Ibank? THanks
What exactly are the functions of the structured products group? What are the hours like? Is it considered part of the Ibank? THanks
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depends which type of structured product (Credit?rates?equities?)
yes it's part of the ibank, what else would it be part of?
credit
Also depends on which credit structuring desk you're on--cash or synthetic. From what I've seen the cash guys work IB hours, every weekend, 10pm to 2am end times during the week, etc. (but they tend to start a lot later than S&T also, i.e. roll in around 9 like the IB guys).
Synthetic desks seems to have better hours, and the timing is more in line with the rest of S&T (i.e. come in btw 6:30 and 8). Probably 60 hrs per week like most of S&T these days.
I've only heard rumours on pay, but I've heard struturing can go higher more quickly, but then levels off and can't hit the same highs as sales, and therefore can't hit the same levels as trading either.
ok. the hours can be long. not like banking but you can definitely be there till midnight or later. credit derivatives structuring involves doing rating agencies analysis, building models, reviewing docs, working with the sales force....
How about comp?
it can be alot of work, but it's not that bad. i would say typically 70 hours a week is a fair assessment, but the weeks can be different. there will be days where you'll be there 12 a.m. as jimbo said, it involves a lot. it also involves alot of other people outside of your group and firm, like developing relationships with rating agencies, trustees on the deal, etc.
comp is in line with other analysts on s&t desks.
Thanks for all the comments.
How is Wachovias structured products group?
no idea. is it in charlotte or new york? don't undersestimate charlotte, you could save a ton of cash down there.
Structured products comes under Capital Markets at Lehman. I'm not sure about other places. The impression I got is that it isn't considered the same as banking.
It has fantastic exit opportunities to Hedge funds though.
Structured Products - How are they traded? (Originally Posted: 04/26/2008)
Hey guys, so in trading what would be some structured products? CDOs? Also how are they traded. I understand they need to be tailored? Thanks!
either CDOs or structured options in any asset class.
Can also refer to stuff like equity-linked notes, participation notes, etc for institutions and also private banks. Many combinations are possible - for example a bank in Asia issued a structured note whose payout is linked to the volume of trades done by 8 different exchanges done over a period of time.
In Asia at least, the most common structured products now would be Range accruals ( "hamster options" for the german-speaking amongst us ) and Accumulators.
Structured Products - Anybody able to expand on this? (Originally Posted: 05/18/2012)
I came across this term whilst reading through a couple of articles today. After having researched a bit around the subject I still don't completely understand what they are and how they work.
I am aware that a structured investment will vary depending on the risk tolerance of the investor. Structured investment products typically involve various exposures to fixed income markets and various derivatives. Conservative investors will have a higher exposure to the fixed income markets, while risk averse investors will have a higher exposure to equities and derivatives.
Anybody care to expand on this?
Thanks.
http://en.wikipedia.org/wiki/Structured_product
Structured products are stuff like ABS, MBS...etc etc
It sounds like he is referring more to structured products as in capital protected market trackers etc. They basically are used to offer an element of market exposure, while reducing some of the risks of a direct investment.
A lot of the retail products are created by purchasing a zero coupon note with c. 80% of the original investment, with the remaining proceeds being used to buy various derivatives to give the desired effect. Obviously there are vanilla and more exotic products, the retail ones tend to be linked to indices, whereas more exotic stuff can be linked to a basket of equities/bonds. The more exotic stuff can have insane amounts of leverage. I seem to remember Gadaffi got stitched up with one, because the product is less transparent and comprised of multiple instruments they used to be a way of incorporating huge fees that banks couldn't otherwise get away with.
If you have a look at the website below it will give you a better idea of the different types of retail product and what they do; those structured by banks can be far more complex.
http://www.structuredproductreview.com/
abs, mbs, rmbs are securitized products which are different from structured products structured products can be developped on equity of FI underlyings, I was used to work with FX structured products. basicaly, structured product = bond (zero coupon or not, all depend of your structure) + vanilla or exotic option(s) or it can also be a combination of several options (buy zero strike call, buy a call, sell a put (or a knock in put) or other combination) hope it helps
Structured Products Groups (Originally Posted: 10/15/2007)
Does anybody know what kind of hedge fund opportunities are typically available for analysts in SPG (ABS/MBS/CDO/CMBS) - specifically toward the banking side? Thanks.
Think about what the sell side does, and picture the buyside counterpart.
-Lots of distressed funds are looking to get involved in CDOs -Trading of any ABS asset is something the buyside participates in -CDOs will face some forced liquidations, making BWICs common for their underlying assets (i.e. get ready to see lots of ABS stuff floating around) -Portfolio mgmt used to be big with CDOs. For all the shops that went out of business, there's demand for OTHER shops to take over their market value deals -ABS/MBS securities still add juice to a fixed-income fund -Heggies like Citadel have bought mortgage issuers because they see some value in distressed MBS/ABS assets
so, to conclude, you got your pure trading, distressed value plays, and portfolio management. and you can do these at Pimco, DE Shaw, or TCW, for example, to see the gamut of types of funds.
Thanks for your input. I'm particularly interested in distressed funds, but I'm not sure how a lot of skills on the banking side of SPG translates into relevant skills for a fund since most of the heavy lifting in modeling are done by structurers. Do distressed funds typically hire SPG banking analysts?
BlackRock has a really strong CDO group ... its CDO deals were not hit as hard as most other CDOs during the summer write downs.
differentiating between a CDO banker / structurer?
they're the same thing.
and yes, numerous distressed funds hire people with origination experience. the alternative is people who did CDO secondary trading.
but people who work in origination/issuance can model out cash flows, and learn how to value (to whatever extent that is possible with this murky asset class!) cheap paper.
Structured Products - Any info? (Originally Posted: 10/23/2006)
Does anyone know about Structured Products of Citi, DB, Wachovia, JPM, .... etc?
Anyone know about the CDO or CLO industry? How will it be in the future?
Exit opps? Pay?
Who are the leaders in the field?
Does anybody have any thoughts on BB&T Capital Markets/Windsor Group IB? sign, salary, bonus, etc. Exit opps? Thanks.
above comment not meant for this thread.
I work in CDOs. Very complex, innovative, interesting stuff. Good future, but defaults will test the instruments. Somewhat to highly quantitative.
what kind of bonuses do the senior guys make? is it as much as trading? do you have exit opps to the top hedge funds?
CDO structures have been well tested. Doesn't mean people will like the results in a 6%+ default environment.
At the end of the day a CDO with decent quality assets is no different than a bank. Just through 12x debt on leveragable assets and you get ROEs of roughly 15% and and triple a rated paper with some stuff in between.
JPM is a key player in the issuance of such paper.
is JPM strong in debt stuff generally? cheers
Anybody know the best way to jump into this stuff? via S&T?
you guys are speaking my language.
how highly quant is it? how are the models? lots of calc or lots of stats?
which is needed?
pay scale would be interesting to know.
right...i hear you on the credit bubble that's in effect now...how long time defaults rise? 5yrs+
also, how does goldman stack up in CDO structuring?
Goldman has almost no CDO capability at the moment. I think they are marketing one deal. JPM, Bear, Citi are the big players.
In one sense there is a credit bubble, but at the same time public companies have zero net debt. Lots of talk about this right now how public companies are basically equity financed right now and PE firms are make a killing just fixing balance sheets. That being said there is a large skew.
You seem to know a lot about this. That's a bit surprising that Goldman and MS aren't big players in CDO.
Also, could you tell me more about what kind of roles are in Goldman's FICC Finance group and how it stacks up compared to other firms?
CDOs involve more stats than calc. correlation analysis, monte carlo simulation, etcetera. Deutsche is a big player in Europe and starting to get big in the US. The deals I work on right now are stuctured by UBS, Barclays, Lehman.
zfreshjive - did you learn all the CDO stats in your stats class or on the job?
are you working on the buy-side of CDO - i suppose HF or money manager that buys the bottom equity or BB portion?
buysideanalyst - your views seem very macro oriented, and less quant base. what do you think is most important for this position? stats or calc?
what are the post analyst opportunities? CDO fund? CDO trading? MBA? or no exits?
all - looking at the Thompson Financial 3Q06 CDO report - how come ML is at the top for Global CDO? am I missing something here?
I don't do the quant work. I do the admin work. Quants are all engineer types-- i am good at math but was a business major. I am on the sell side-- moving into the deal-making/structuing side. Eventuall i'll 'retire to the buy-side'
zfreshjive - we should talk offline.
we'll be in the same industry (i'm at one of the large firms listed above)- possiblity i will be doing the admin stuff as well.
[email protected]
I've heard having a legal background is good for structured products. true? and if so, why?
An indenture is a very confusing legal document to read which includes the minimum percent of overcollaterization to meet. I rather run through the window than to read these indentures. One word of advice when looking for CDO's and you are a statistical genious, DON'T BE A TRUSTEE!!!. Thats the reason why I quit being a trustee.
Technically the structuring isn't that difficult, at this point its just a template. I have no idea how many entry level positions are available in structuring CDOs. I can't imagine very many. The other major roles surround execution. I imagine the opportunities are limited. It wouldn't prepare you at all to work a fund that uses CDOs to raise capital in an analyst role. It would prepare you for a capital raising role however.
ML is a big player. It shifts from quarter to quarter. Also I don't know about the entire asset backed universe, I only know about the high-yield debt universe.
Structured Product Investing -- Who does it? (Originally Posted: 10/20/2012)
I tend to be a big fan of investing in structured products and was curious to hear what people think of / do with these specialty pools of products... feel free to drop some knowledge on specific products youve bought that youre very happy with btw
A personal favorite of mine I purchased at the end of May 2011 --
Tied to the SPY, the underlying trade price was 131.64. With a 2 year maturity window on the product, as long as the SPY holds above 131.64 on May 26, 2013 I receive a 17.6 coupon return -- even if it is up a penny. If we are up 20 percent on the SPY, I collect that return instead.
I'm going in on a 5 year (LONG) note today that is tied to the EURO STOXX 50 -- I have principal protection up to a 50 percent downside risk but have a levered upside factor of 1.94x whatever the STOXX 50 closes at in 5 years
where do you buy these from? guessing that its through a full-service broker?
UBS PWM but i think any of the PWM shops have it but you need to have certain asset threshholds
Not to be a Debbie Downer, but I am not a fan of most of these types of products. The problem is that you are taking the credit risk of the issuer and you are not getting paid fairly for doing so. One of the tricks in most of these products is that you are not entitled to any of the dividends, which can be significant over a multi-year time frame. For the EURO STOXX index, the dividends will be close to 20% of the initial value over a five year period. If UBS (or whoever the issuer is) goes bankrupt, you lose everything. This happened to people who bought Lehman structured notes, so it can happen. Not to mention, if you need liquidity before maturity, you will get your face ripped off.
Also, relevant thread here: http://www.wallstreetoasis.com/blog/where-the-traders-at-market-linked-…
[quote=SirTradesaLot]Also, relevant thread here: http://www.wallstreetoasis.com/blog/where-the-traders-at-market-linked-…]
Agreed with SirTradesaLot's very insightful analysis in both threads. Also I recommend Credit Derivatives and Synthetic Structures by Janet Tavakoli. Janet truly was prescient and foresaw many of the disasters that were to materialize later.
Interesting you brought this up. The endowment I'm working at had a few million invested in a HF specializing in this. It performed poorly and we pulled our money.
FT posted a good article the other day outlining the rise in SP and some of the drawbacks. They were pretty negative on their future potential.
i think there are some that are definitely pretty shitty and can be 'structured' on your own but at the same time i think there are definitely some that are worthwhile to look at -- just like picking any certain investment
My God!!! I can spot my banks structured product from a mile away! @Sirtradesalot: if UBS goes bankrupt? - client money diversification! brokers are now required to diversify clients fund for most of the structured products, so the default risk is reduced. Not eliminated but reduced.
The trick to structured products is to ask your self if you did it on your own how much value is at risk or to be gained? However seeing no average investor will buy a vix option latched on to a SPY and covered by a downside ETF (that actually pays dividend, which of course will not be passed on to the client most times) etc, this is the very reason you pay the broker to give you a simplified version for a little commission.
Diversification is fine, but if you were to think of the companies that would be the most likely to default at the same time, which ones do you think they would be? My guess: financial institutions that issue things like structured notes. If 2008 had played out just a little differently, almost every issuer would have gone bankrupt, instead of just Lehman Brothers. Diversification wouldn't have helped much.
It's your money, so if you want to take that risk, you are free to do so.
.
Monkeys Assemble!! Structured products anayst (Originally Posted: 05/03/2010)
Monkeys Assemble!! There is no forum or thread that discusses this question What does a structured products first year analyst at a BB do?? and what is the path after that if you want to stay.
lot of legal documentation and drawing up of options payout graphs
What part of structured products? S&T? Research? Origination?
From the S&T side there are some threads.
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