Hedge Funds and Asset-Backed Securities: Rapid Fire

What this video covers

• The two exemption layers that keep hedge funds private: the 1940 Act exemption (who owns the fund) and the Regulation D private placement exemption (who the offering is sold to)
• How the 100-beneficial-owner exemption caps ownership at 100 without requiring accredited status, and how look-through rules treat a fund of funds
• Why the qualified-purchaser exemption has no owner cap but sets a higher bar: $5 million in investments for individuals, $25 million for institutions
• The illiquidity of hedge funds from lock-up provisions and the absence of a secondary market, plus the "2 and 20" fee structure and Schedule K-1 tax reporting with phantom income
• The core securitization process: originator, pooled trust, tranches, investor cash flows; and the clean-up call triggered near 10% remaining pool balance
• Why collateralized mortgage obligations (CMOs) divide timing risk while collateralized debt obligations (CDOs) divide credit risk, and the cash-flow waterfall top-down with losses bottom-up
• How prepayment (contraction) risk and extension risk operate in mortgage pools, and the inverse behavior of interest-only (IO) strips versus principal-only (PO) strips