Category Archives: Finance & Economics

Exchange Traded Funds: Rise of Passive Investing…Series Begins

This article has first posted here on July, 18 2017. Sharing it again. 

ETF also known as Exchange Traded Funds are on a meteoric rise globally. According to a report by PWC, ETF’s in the US is going to grow to $5.9 trillion by 2021, a whopping 23% cumulative annual growth compared to $1.6 trillion in Europe and $560 billion in Asia. ETF’s are passive investment products which track an index. Exchange Traded Funds are linked to different asset classes like equities and commodities. In the US, S&P 500 would be a broad equity index so an ETF linked to S&P 500 would replicate this index. Replication here means it would track the index. ETF would not outperform the underlying index i.e. S&P 500 but rather deliver similar returns. Let’s understand a few concepts here.   Continue reading Exchange Traded Funds: Rise of Passive Investing…Series Begins

The Innovative Finance Revolution: Private Capital for the Public Good (Foreign Affairs Special Edition)

Foreign-Affairs-Inn-Fin-cover-440x367.jpgThe Innovative Finance Revolution is one of the best reports on innovation in social finance. Social finance was evolved over the years and with philanthropy and corporate social responsibility evolving through evidence-based social impact, attracting private capital has been imperative for sustainable work in the social sector. I read this report while I was in Seattle and found it to be one of the most comprehensive reports on different projects and modes of financing used by various foundations, multilateral organizations and nonprofits in implementing sustainable social projects in emerging and poor economies or sustainable infrastructure projects in Americas. From social impact bonds, green bonds to vaccine immunization bonds, report chronicles articles by leading experts and practitioners in developmental finance. UN estimates $50 to $70 tr of capital to implement Sustainable Development Goals over the next 25 years, a huge task which can only be achieved by attracting private capital. Rockefeller Foundation is the world’s leading foundation and a bellwether in innovating impact capital in philanthropy. To achieve UN Sustainable Development Goals, a gap of approx. $2.5 tr annual funding gap is required from the $200 tr pool of private capital. Continue reading The Innovative Finance Revolution: Private Capital for the Public Good (Foreign Affairs Special Edition)

Book reviews coming soon…

downloadI am presently reading, The End of Poverty by Jeffrey Sachs which includes a foreword by Bono, one of the greatest musicians of our time. From I still haven’t found what I am looking for to Staring at the Sun, Bono of U2 group is a quintessential pop and rock musician, known among other things to be a great philanthropist and humanitarian.The End of Poverty gives an in-depth analysis of the various factors that led countries on different paths to prosperity and poverty. Jeffrey Sachs, an imminent development economist, shares both practical and pragmatic overview of international development and policies pursued in eradicating poverty. A detailed review would also come up. The other book which deals with eradicating poverty and on my reading list is Banker To The Poor, by Muhammad Yunus of Grameen Bank. Dr. Yunus, a Nobel Peace Prize laureate, revolutionized micro-finance in Bangladesh and is known as father of modern micro-finance.  Continue reading Book reviews coming soon…

Module on Structured Products

The first module I published on my blog was on Structured Products. Globally, structured products form an important part of asset allocation and portfolio management. It also a very good way of taking exposures across various asset classes ranging from forex, commodities, equities, interest rates etc. Digital options form an important part of some of the products detailed here. Digital options are binary options i.e. the payout would be zero or predetermined as defined in the investment mandate.

The presentation which was first published in 2015 on this blog, details brief outline on structured products, different types of structured notes, range accrual plans, knout out structured notes and valuation of a NIFTY equity lined structured note.

Check out this link

https://themiddleroad.org/knowledge-tutorials-presentations/

 

Fed Hikes Rate

Federal Reserve today raised the US Fed Fund rates and the rate will range between 1.75% to 2%. Fed rate decides mortgage,  credit card, student loan rates among others. The rates are now close to pre-credit crisis levels. This was widely anticipated, so let’s look at what Fed rate means and Federal Reserve manages to keep the rates with a tight band.