Chenavari Flashcards
Credit derivatives
are financial contracts whose value is derived from the creditworthiness of an underlying entity or group of entities. They’re used to transfer credit risk from one party to another. e.g. credit default swaps
Asset-backed securities
ABS are financial securities backed by a pool of assets, typically consumer loans or receivables. The assets generate cash flow, which is used to pay investors who buy the securities.
Commercial mortgage backed securities
CMBS are a type of ABS specifically backed by commercial real estate loans. They’re created by bundling together many commercial mortgages and selling them to investors.
Collateralised loan obligations
CLOs are a type of security backed by a pool of corporate loans, typically leveraged loans (loans to companies with higher debt levels). The CLO is divided into different tranches with varying levels of risk and return. These are actively managed.
European credit markets
refer to the buying and selling of debt instruments issued by European entities, including governments, corporations, and financial institutions. These markets encompass govt bonds, corporate bonds, credit default swaps
Key characteristics of European credit markets:
- Influenced by ECB monetary policy and individual country fiscal policies
- Affected by EU regulations and directives
- Often considered as an alternative to US credit markets for diversification
Alternative fixed income
refers to debt instruments and investment strategies that fall outside traditional government and investment-grade corporate bonds. This category can include high-yield bonds, structured credit, private debt, distressed debt
Key characteristics of alternative fixed income
- Generally offers higher yields than traditional fixed income
- Often involves more complex analysis and risk assessment
- Can provide diversification benefits to a traditional portfolio
- May have lower liquidity compared to traditional bonds
- Often requires specialized expertise to manage effectively
Structured credit?
- Securities backed by pools of assets, including:
- Asset-Backed Securities (ABS)
- Commercial Mortgage-Backed Securities (CMBS)
- Collateralized Loan Obligations (CLOs)
What are Astra Am
European alternative credit manager that focuses on mispriced credit instruments to deliver best performance for investors with least volatility
Philosophy as a hedge fund
- value based approach for complex credit assets that are mispriced
- Active management - interesting considering recent trend
- Focused on relative value trades with short/medium term time horizon
Shikha Gupta
Joined in 2017, portfolio manager
Focuses on ABS ofc but more specifically CLOs, CDOs and CDS books
Dr Christian Adler
cofounder, member of investment management team
responsible for managing overall portfolio risk of Astra’s investments
Senior trader of CDO/ABS book at DB
What are benefits interest rates are lowered
- Improved performance of rate-sensitive sectors like real estate, potentially benefiting CMBS
- The impact would depend on how quickly and by how much rates are lowered
What are benefits of interest rates are lowered
- Improved performance of rate-sensitive sectors like real estate, potentially benefiting CMBS
- The impact would depend on how quickly and by how much rates are lowered
Credit Analysis
For a hedge fund focused on credit, this would likely include:
1. Analyzing financial statements
2. Assessing debt levels and repayment capabilities
3. Evaluating industry trends and company positioning
4. Reviewing credit ratings and market sentiment
5. Identifying potential risks and opportunities in credit markets
Scenario Analysis
this might involve:
1. Modeling different economic scenarios (e.g., recession, interest rate changes)
2. Stress testing portfolios under various market conditions
3. Assessing how different events might affect credit quality of investments
4. Analyzing potential impacts of regulatory changes or geopolitical events
Competitors
ufg asset management- larger firm tho but russian focused so how has that affected competition - i have seen its 5 yr stock price fallen massively etc. but couldn’t look into it further as wifi was restricted
chenavari
What is the role?
Mention monitoring existing positions across funds, including credit and scenario analysis
Highlight quantitative assessment of proposed transactions
Note the involvement in investor relations, including report preparation and presentations
Emphasize working closely with senior management on various projects
How does background align with role
Highlight relevant experiences and skills from your CV:
* Your First Class Economics degree, particularly modules in Security Investment Analysis and Financial Econometrics
* Internship experience in financial analysis, especially at AP Commodities and Alliance Bernstein
* Strong analytical and quantitative skills developed through your studies and internships
* Experience in preparing reports and presentations for clients (from AP Commodities)
* Ability to work in fast-paced environments and manage multiple tasks, as demonstrated by balancing academics and competitive tennis
Questions to ask
,would this role require me to really get stuck into specific strategies assisting certain portfolio managers or is it more of a general learning experience from various senior members at astra?
What is the potential career growth for me personally in this role?
Typical day-to-day as trading assistant
why do you like the role? Why does it match what I’m looking for? Why specifically trading/investment roles within financial services industry?
Mention your interest in the analytical aspects, particularly credit and scenario analysis
Note the appeal of being involved in multiple aspects of fund operations, from analysis to investor relations
SIA Module focus i thoroughly enjoyed etc.
This role, when seeing the job spec, showed greatest learning curve potential than traditional graduate role
Remember to provide specific examples from your experiences to support your answers
Mortgage backed securities
Banks bundle together many individual mortgage loans and sell this package to investors.
Structure: The MBS represents a claim on the principal and interest payments made by borrowers on the loans in the bundle.
Types:
* Pass-through securities: investors receiver proportional share of payments
* Collateralized Mortgage Obligations (CMOs): More complex, divided into tranches with different risk levels and payment structures.
Cash flow: As homeowners make their mortgage payments, investors receive a portion of these payments.
Risk factors:
* Prepayment risk: Borrowers may pay off mortgages early, affecting expected returns.
* Default risk: Borrowers may fail to make payments.
* Interest rate risk: Changes in rates can affect the value of MBS.
