Category 11
Structured & alternative-income investments
Engineered income: contracts, pooled credit and cash flows packaged into a security.
Everything in this category is paid the same way, so what separates one page from the next is the wrapper rather than where the money comes from: how much it takes to start, how quickly you could turn it back into cash, who does the work, how it is taxed, and how it fails. The line on each card says whether the income keeps arriving once it is set up or whether somebody has to keep working for it. If the mechanism itself is new to you, the course spends a whole lesson on it and is a shorter way in than any single page here.
Structured Notes
A bank's unsecured note whose payoff is set by a formula on an index or a stock, so the coupon comes from selling optionality rather than from a straight interest rate.
Read →Market-Linked Notes
A note or bank CD whose return is calculated from an index rather than a fixed rate, usually with principal repaid at maturity and the upside scaled by a participation rate or a cap.
Read →Convertible Bonds
A corporate bond that pays a coupon and can be exchanged for a fixed number of the issuer's shares, so the buyer accepts a lower rate in return for equity upside.
Read →Preferred Equity (Private)
A private position above the common equity and below the debt, paid a stated preferred return before the sponsor earns anything. This is not the exchange-listed preferred share.
Read →Mezzanine Debt
A subordinated loan sitting between the senior lender and the equity, priced high because it is repaid last and usually secured by a pledge of ownership interests rather than the asset itself.
Read →Equipment-Finance Funds
A pooled fund that buys business equipment and leases or finances it to operators, distributing the rentals and loan payments while the equipment depreciates toward a residual value.
Read →Litigation-Finance Funds
A fund that pays a claimant's legal costs in exchange for a share of any award or settlement, and receives nothing at all if the case is lost.
Read →Insurance-Linked Securities
Investments whose payout depends on whether an insured event happens: the investor is paid a spread for taking insurance risk and loses principal when losses breach the trigger.
Read →Catastrophe Bonds
A tradable note issued by a special-purpose insurer that pays a floating coupon and returns principal only if a defined natural catastrophe does not breach its trigger.
Read →Trade-Finance Funds
A fund that finances goods moving between buyer and seller, making short self-liquidating loans that are repaid when the shipment is delivered and paid for.
Read →Receivables Factoring
Buying a business's unpaid invoices at a discount and collecting the full amount from its customers, so the return is the discount rather than an interest rate.
Read →Invoice Financing
Lending against a business's unpaid invoices rather than buying them: the borrower keeps ownership, collects from its customers, and repays the advance with interest.
Read →Music and Pharmaceutical Royalty Funds
Funds that buy the right to receive future royalty payments from song catalogues or approved drugs, then distribute the collections to investors.
Read →Life-Settlement Funds
A fund that buys existing life insurance policies from their owners, keeps paying the premiums, and collects the death benefit when the insured dies.
Read →