Master Limited Partnerships—Insight Series No. 2, February 2020

Total Return Swaps: What Do Investors Need to Know?

Ever since the 2007–2008 financial crisis, many investors have become wary of using derivative contracts of any kind. With Collateralized Debt Obligations (CDO’s) at the technical heart of the mortgage meltdown and subsequent financial panic, all but institutional investors have shied away from using these financial tools and have become skeptical of investment products that use them. This short piece provides some background on Total Return Swaps and how Liberty Cove Investors uses them to achieve the desired asset class exposures in our portfolios, without taking undue risk.