[raptor_f22]

Hey guys,

Just wondered if anyone out there worked for a Hedge Fund, Asset Management or Alternative Investment Company.

I have a test coming up of sorts and I'm not from a finance background so struggling to get my head around some specifics and concepts.

Please PM me if you have knowledge of what these types of companies do, how they make money, the differences between them etc and I will ask some more specific questions.

Thanks in advance

[HassShah]

I think Imy on the forum would be the person to talk to as from past posts I am 90% sure he's in that particular sector. If you go to the thread "what do you do" and on the last page you will find a reply to the thread to send him a PM?

[imy]

Hi

I'm a Treasury Manager for a bank. I don't deal directly in the above topics but we are owned by one of the biggest global hedge funds and we have an asset management entity that I provide funding for so I have some knowledge on the topic.

Shoot me a pm with some more direct questions and I can see if i can help in any way.

[AWSAWS]

Originally Posted by raptor_f22

Hey guys,

Just wondered if anyone out there worked for a Hedge Fund, Asset Management or Alternative Investment Company.

I have a test coming up of sorts and I'm not from a finance background so struggling to get my head around some specifics and concepts.

Please PM me if you have knowledge of what these types of companies do, how they make money, the differences between them etc and I will ask some more specific questions.

Thanks in advance

It's just buy low, sell high isn't it?

Maybe give Billions a watch and you'll see it's all based on inside information lol

On a serious note though I studied FOREX for a long time and worked for a guy setting up a private investment company. I learned alot but it really is very difficult to believe that it's not all chance and probability based as most people are too far behind on the information that matters. You can pre-empt and try to cover the down sides etc. I find Nassim Taleb's books like the Black Swan very interesting. Oh man, if I could ave got some credit default swaps in 2007!

[misterS3]

Originally Posted by imy

Hi

I'm a Treasury Manager for a bank. I don't deal directly in the above topics but we are owned by one of the biggest global hedge funds and we have an asset management entity that I provide funding for so I have some knowledge on the topic.

Shoot me a pm with some more direct questions and I can see if i can help in any way.

Libor 3month swap? Going up or down post brexit announcement?

I have a stupidly large break cost to incur as i'm having to refinance my business so the lower the rate when i break the more i pay! My thoughts are that everything is hopefully priced in by now but her announcement may push things down further.

I was told it's 0.85 at the moment

[imy]

Originally Posted by misterS3

Libor 3month swap? Going up or down post brexit announcement?

I have a stupidly large break cost to incur as i'm having to refinance my business so the lower the rate when i break the more i pay! My thoughts are that everything is hopefully priced in by now but her announcement may push things down further.

I was told it's 0.85 at the moment

I'm actually on holiday at the moment and have no access to bloomerg. But are you asking about 3m Libor or swap rates against 3m Libor?

3m Libor is at 35bps today. I couldn't get you a swap quote unfortunately. I can provide an average swap rate but this will be generic.

[imy]

Originally Posted by AWSAWS

It's just buy low, sell high isn't it?

Maybe give Billions a watch and you'll see it's all based on inside information lol

On a serious note though I studied FOREX for a long time and worked for a guy setting up a private investment company. I learned alot but it really is very difficult to believe that it's not all chance and probability based as most people are too far behind on the information that matters. You can pre-empt and try to cover the down sides etc. I find Nassim Taleb's books like the Black Swan very interesting. Oh man, if I could ave got some credit default swaps in 2007!

Hindsight is a fine thing. Was well before my banking career started however.

[AWSAWS]

Originally Posted by imy

Hindsight is a fine thing. Was well before my banking career started however.

When you could buy insurance on it at 1% it was worth a blind bet

[AWSAWS]

...but of course it was only really open to large institutions anyway

[misterS3]

Originally Posted by imy

I'm actually on holiday at the moment and have no access to bloomerg. But are you asking about 3m Libor or swap rates against 3m Libor?

3m Libor is at 35bps today. I couldn't get you a swap quote unfortunately. I can provide an average swap rate but this will be generic.

Hi

Hope you're having a good holiday

I'm not actually sure what figure i'm being quote for 85bps. All i know is the more that figure drops i.e the most craziness going on in the world the more it costs me.

I wonder if its 3M Libor plus a treasury funding cost that i've paid.

Ta

[imy]

all rates are usually benched as libor + xxbps (libor in this case is usually always 3m). Looking at your rate I think yours looks like 3ML + 50bps.

OP I have received your PM. Bit jet lagged and falling asleep at work as we speak to bear with me and I will get as much information as I know on this for you.

[raptor_f22]

Originally Posted by imy

all rates are usually benched as libor + xxbps (libor in this case is usually always 3m). Looking at your rate I think yours looks like 3ML + 50bps.

OP I have received your PM. Bit jet lagged and falling asleep at work as we speak to bear with me and I will get as much information as I know on this for you.

Thanks imy

Additional question to my PM:

If a AM prides itself on long only strategies and investing in fund of funds, why would they then also have a "fund" which is working on a long-short strategy and also stipulates that it holds 20% of the investments of that fund in one particular country e.g China? What's the advantage to the AM and their clients?

[imy]

Originally Posted by raptor_f22

Thanks imy

Additional question to my PM:

If a AM prides itself on long only strategies and investing in fund of funds, why would they then also have a "fund" which is working on a long-short strategy and also stipulates that it holds 20% of the investments of that fund in one particular country e.g China? What's the advantage to the AM and their clients?

I have replied to your pm. I don't follow the above query and since I don't work in Asset Management not sure I could answer it completely.

Todays market is mostly based on risk, in the banking sector risk is always the main driving factor. Bigger banks take more risk granted - but you need to have something for everyone. Would I invest in a fund that invests in China? possibly but my Risk team would not approve it and neither would a lot of other investors. Therefore you will tailor your fund, you could create a number of different funds that apply a generic template of derivatives and European/Australian counterparties, you then create another fund using these fundamentals but then include China into the mix, offer a higher rate of return and now you have a Far Eastern Money fund.

[misterS3]

Originally Posted by imy

all rates are usually benched as libor + xxbps (libor in this case is usually always 3m). Looking at your rate I think yours looks like 3ML + 50bps.

OP I have received your PM. Bit jet lagged and falling asleep at work as we speak to bear with me and I will get as much information as I know on this for you.

Thanks IMY

It's like watching a falling a knife..... i need to do this refinance....but it just keeps going down and down (i'm sure we'll be talking about historic lows for years to come knowing my luck!!)..and hence costing me more and more! I'm sure as soon as i pull the trigger...it'll climb like a mofo!

[imy]

Originally Posted by misterS3

Thanks IMY

It's like watching a falling a knife..... i need to do this refinance....but it just keeps going down and down (i'm sure we'll be talking about historic lows for years to come knowing my luck!!)..and hence costing me more and more! I'm sure as soon as i pull the trigger...it'll climb like a mofo!

Base rate will rise soon ( I expect this yr) which will increase rates all round.

[djgandy]

Originally Posted by imy

Base rate will rise soon ( I expect this yr) which will increase rates all round.

Really?

How will anyone pay their mortgage lol.

[imy]

Originally Posted by djgandy

Really?

How will anyone pay their mortgage lol.

im sure they will be fine.

[djgandy]

Originally Posted by imy

im sure they will be fine.

I am not so sure in London, people are borrowing huge amounts based on 1.5% deals and 30 year terms. If that number goes to even 2.5% the monthly payment increase is pretty significant. Any percentage near long term average rates would could significant problems for a lot of people, I'm not even talking low earners here either.

I think they should rise the rate, but it feels to me that they are in a rock and a hard place after having let too many asset bubbles form with rates so low.

[imy]

Originally Posted by djgandy

I am not so sure in London, people are borrowing huge amounts based on 1.5% deals and 30 year terms. If that number goes to even 2.5% the monthly payment increase is pretty significant. Any percentage near long term average rates would could significant problems for a lot of people, I'm not even talking low earners here either.

I think they should rise the rate, but it feels to me that they are in a rock and a hard place after having let too many asset bubbles form with rates so low.

your talking about mortgages? people are borrowing over 30yrs, I have a 30yr mortgage term myself. People take out fixed rate products and they re mortgage when they need to. Mortgage rates re-align themselves to base rates. a 25bps rate increase will not have much damage at all.

If someone is paying 1.5% now based on base rate, base is only going to increase 25bps, they will be paying 1.75%. It will take a very long time for base to increase to 1%, and by the time it does lending rates will have reflected this.

My BOE TFS facility allows me to borrow at 25bps to stimulate lending. this fee is attached to base rate so will increase with hikes. my cheap access to cash is dependant on my lending criteria. its a % of what I intend to lend, if I don't lend I don't get it. Just the savers will continue to get hit as demand for retail cash continues to diminish.

Overall some people will get hurt... but only a very very small pool of idiots.

Financial studies should be part of the curriculum at schools - its an absolute travesty that it is not.

[djgandy]

Originally Posted by imy

your talking about mortgages? people are borrowing over 30yrs, I have a 30yr mortgage term myself. People take out fixed rate products and they re mortgage when they need to. Mortgage rates re-align themselves to base rates. a 25bps rate increase will not have much damage at all.

If someone is paying 1.5% now based on base rate, base is only going to increase 25bps, they will be paying 1.75%. It will take a very long time for base to increase to 1%, and by the time it does lending rates will have reflected this.

My BOE TFS facility allows me to borrow at 25bps to stimulate lending. this fee is attached to base rate so will increase with hikes. my cheap access to cash is dependant on my lending criteria. its a % of what I intend to lend, if I don't lend I don't get it. Just the savers will continue to get hit as demand for retail cash continues to diminish.

Overall some people will get hurt... but only a very very small pool of idiots.

Financial studies should be part of the curriculum at schools - its an absolute travesty that it is not.

Yeah I'm talking about mortgages, because its the only product that us mere mortals see a direct change in as a result of base rate changes. Car loans, credit cards etc are all largely unchanged since 2007 in terms of APR. Funnily enough property prices have soared in response to cheaper mortgages, much like most other asset classes that you can leverage against with low financing rates.

Sure if it only rises 25 bps which is back where it was last year (before the BOE dropped it for no data backed reason), it wont make hardly a difference. But if it starts rising towards 1.5%, 2% or anywhere near long term normal levels that were promised years ago it will suck a lot of money out of the economy and also put payments up a fair amount for a lot of people when they come to remortgage.

It's not just the rate itself that matters but the knock on effect. Raising rates will also likely put a hold on value increases as it reduces the total amount people can afford monthly. It may even start decreases in which case remortgage-ers will become affected too as their LTV is diminished. Hence I get the feeling the BOE is actually unable to voluntarily put rates anywhere near long term averages and is limited to a token gesture of 25bps maybe once per year.

My concern in all this is that the BOE is completely ammo-less if some external event happens that traditionally would be combated with tighter monetary policy. If inflation starts ramping up at 5-6% what can they do? 25bps isn't going to touch the sides on high inflation levels.

[imy]

Originally Posted by djgandy

Yeah I'm talking about mortgages, because its the only product that us mere mortals see a direct change in as a result of base rate changes. Car loans, credit cards etc are all largely unchanged since 2007 in terms of APR. Funnily enough property prices have soared in response to cheaper mortgages, much like most other asset classes that you can leverage against with low financing rates.

Sure if it only rises 25 bps which is back where it was last year (before the BOE dropped it for no data backed reason), it wont make hardly a difference. But if it starts rising towards 1.5%, 2% or anywhere near long term normal levels that were promised years ago it will suck a lot of money out of the economy and also put payments up a fair amount for a lot of people when they come to remortgage.

It's not just the rate itself that matters but the knock on effect. Raising rates will also likely put a hold on value increases as it reduces the total amount people can afford monthly. It may even start decreases in which case remortgage-ers will become affected too as their LTV is diminished. Hence I get the feeling the BOE is actually unable to voluntarily put rates anywhere near long term averages and is limited to a token gesture of 25bps maybe once per year.

My concern in all this is that the BOE is completely ammo-less if some external event happens that traditionally would be combated with tighter monetary policy. If inflation starts ramping up at 5-6% what can they do? 25bps isn't going to touch the sides on high inflation levels.

I think you will find mortgage rates will rise regardless of a rate increase. The US FED rate increase will have an impact on mortgage rates as it will increase cost of funds for mist lenders. But yes I see your point, and my opinion isn't a million miles off yours.