What Is A Special Investment Vehicle (SIV)?

Patrick Curtis

Reviewed by

Patrick Curtis WSO Editorial Board

Expertise: Investment Banking | Private Equity

A Special Investment Vehicle, or SIV, is a collection of investments that earns profit on the difference in price (spreads) between structured financial products (CDOs, MBS's etc.) and short-term debt.

For example, a SIV may borrow money in the wholesale market at 2% and then invest it in structured products for a return of 5% and earn a profit of 3%. SIVs are usually highly leveraged to magnify returns and borrow on a very short-term basis and as a result, are very exposed to liquidity in the money markets.

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Patrick Curtis

Patrick Curtis is a member of WSO Editorial Board which helps ensure the accuracy of content across top articles on Wall Street Oasis. He has experience in investment banking at Rothschild and private equity at Tailwind Capital along with an MBA from the Wharton School of Business. He is also the founder and current CEO of Wall Street Oasis. This content was originally created by member WallStreetOasis.com and has evolved with the help of our mentors.