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Rekenthaler Report

Mutual Funds: Where Fun Came to Die

The industry is better than ever--but also duller.

Structured Notes
The perpetually perceptive Matt Levine recently had this to say about structured notes (structured notes being a security created by attaching derivative contracts to a bond).

“The [underlying value of the structured note] will be, like $97. The bank will sell you the note for $100. The bank makes $3. It’s a pretty good business for the bank. What are you doing, though? The answer can’t be ‘buying $97 for $100.’ The structured note tells a story, and you are buying that story.”