INVESTMENT BANKS
Investment
banking is a type of financial institution or can be referred to as one of the
branches of banking that provides with means for raising capital, mergers and
acquisitions, services in the nature of advisory services to the governments,
organisations and corporations. Investment banking
companies operate as go-betweens for investors (those with money to invest)
and corporations (those with money to invest) (who require capital to grow and
run their businesses).
WORKING
OF INVESTMENT BANKS
The
difference between an investment bank and a bank's investment banking division
(IBD) might be confusing at times. Underwriting, M&A, sales and trading,
equities research, asset management, commercial banking, and retail banking are
just a few of the services offered by full-service investment banks. Only
underwriting and M&A consulting services are provided by a bank's
investment banking section.
MOVEMENT
OF INVESTORS
The
global second quarter bear market rebound in major stock markets brought up
memories of the tremendous returns of the 1990s, which were wiped out by the
internet bust and recent US financial scandals.
As
a result of these losses, institutional investors and certain investment
banking sectors have shifted their portfolios away from traditional mutual
funds, which aim to beat an index benchmark, and toward alternative
investments, which promise capital preservation and positive returns regardless
of market indices or market conditions. Long-only
funds are one example.
LONG-ONLY
FUNDS
This
type of funds invests in long positions, seeks out cheap assets, and reduces
volatility and downside risk by holding cash, fixed income, and other asset
classes. Options, futures, and other derivatives may be used by this fund to
decrease or "hedge" risk and gain exposure to underlying physical
investments, but not for speculative purposes. Investment funds that aren't
hedge funds can also provide exposure. Long-Only ARFs, in contrast to typical
funds that seek relative returns, pursue strategies that they believe will
produce in positive or "real" returns independent of any index benchmark
under all market conditions.
