Hedge Funds and Asset-Backed Securities: Rapid Fire

What this video covers

• The two separate exemption layers for hedge funds, the 1940 Act investment-company exemption and the Regulation D private-placement exemption, and which one requires accredited investors
• The 100-beneficial-owner cap, why beneficial owners differ from investors, and how look-through rules for funds of funds (FOF) create an exam trap
• The qualified-purchaser exemption: no owner cap, but a $5 million individual or $25 million institutional threshold that exceeds accredited-investor status
• Why hedge funds are illiquid, what "2 and 20" fees mean, and why investors receive a Schedule K-1 with potential phantom income instead of a 1099
• How securitization works: originator, trust, tranches, and the distinction that collateralized mortgage obligations (CMOs) divide timing risk while collateralized debt obligations (CDOs) divide credit risk
• Why the Planned Amortization Class (PAC) tranche has the lowest timing risk and lowest yield, while the companion tranche has the highest timing risk and highest yield
• Why interest-only (IO) strips move inversely to typical bonds when rates rise, and why principal-only (PO) strips act like typical bonds when rates fall
• How CDO cash flows run top-down to senior tranches first while losses run bottom-up to equity or junior tranches first, and why the 10% pool balance triggers a clean-up call