- Real money investors are institutional investors, such as pension funds, insurance companies, and hedge funds, who invest in securitisations.
- These investors are typically looking for investments that offer a steady stream of income and a low level of risk.
There are a number of applications of real money investors in securitisation, including:
- To provide liquidity: Real money investors can provide liquidity to the securitisation market. This is because they are typically willing to buy and sell securitisations, which can help to keep the prices of securitisations stable.
- To reduce risk: Real money investors can help to reduce the risk of securitisations. This is because they are typically well-diversified and have a long-term investment horizon.
- To attract investors: Real money investors can help to attract investors to securitisations. This is because they are seen as a sign of quality and can help to boost the confidence of other investors.
Here are some examples of how real money investors are used in securitisation:
- Mortgage-backed securities: Real money investors are a major source of demand for mortgage-backed securities. These securities are typically issued by banks and other financial institutions, and they are backed by a pool of mortgages.
- Collateralized debt obligations: Real money investors are also a major source of demand for collateralized debt obligations (CDOs). These securities are typically issued by investment banks and other financial institutions, and they are backed by a pool of debt instruments, such as mortgages, corporate bonds, and loans.
Real money investors play an important role in the securitisation market. They provide liquidity, reduce risk, and attract investors to securitisations.