Subscribe to this blog's feed...this prompted by the rather startling news that a sizeable proportion of funds and institutions investing in structured products had no idea what they were doing. (Original survey here).
According to the results, 40% of mainstream fund managers surveyed said they had bought products for which they had no framework to assess risk.Meanwhile, 20% of mainstream fund managers admitted to having no in-house specialist with relevant experience of the derivatives or structured products in which they invested. Among institutional investors who invested in derivatives or structured products, the figure was even higher, at 32%.
But, to be fair on the investors, they weren't completely ignorant - only 1% of them entirely agreed that credit ratings provided an accurate measure of PD. Their caution may have been wise given yesterday's news from Moody's.
