Exotic Interest Rate Swaps: Snowballs in Portugal

Boris  Vallee; Patrick  Augustin; Philippe  Rich

Teaching Note | HBS Case Collection | August 2017

Exotic Interest Rate Swaps: Snowballs in Portugal

by Boris Vallee, Patrick Augustin and Philippe Rich

Abstract

This case explores a complex swap transaction implemented by Metro do Porto in 2007. It represents an opportunity to study fixed income derivative instruments, such as plain-vanilla swaps and structured swaps, as well as understand the opportunities and challenges of using innovative financial instruments. The public sector setting allows discussion of the political economy implications of such transactions. Teaching Note for HBS No. 217-050.

Keywords: swaps; public finance; Structured Finance; Credit Derivatives and Swaps; Public Sector; Transportation Industry; Rail Industry; Portugal;

Language: English

Format: Print

9 pages

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Citation:

Vallee, Boris, Patrick Augustin, and Philippe Rich. "Exotic Interest Rate Swaps: Snowballs in Portugal." Harvard Business School Teaching Note 218-018, August 2017.

Teaching Note | HBS Case Collection | March 2018 (Revised March 2018)

OpenInvest

Boris Vallee and Caitlin Reimers Brumme

Founded by a team of hedge fund and NGO alumni, OpenInvest launched its platform in 2015 to enable retail investors to tailor their portfolio to their personal values in an automated way, for instance by screening out weapon manufacturers stocks or overweighting LGBTQ friendly companies, while still closely tracking the overall stock market performance. Bolstered by $3.25M in seed funding from Andreessen Horowitz, in 2017 OpenInvest was also preparing to launch an app targeted at millennial customers that would include a novel proxy voting feature that allowed clients to vote on shareholder resolutions with a simple swipe. With this technological addition OpenInvest was well on its way towards realizing its mission of democratizing SRI investing, bringing transparency to the financial services market, and enabling retail investors to invest their capital in a way that aligned with their values. However, getting to scale and profitability in the crowded robo-advisors space was a critical challenge. The case closes with the founders contemplating expanding or migrating their model from B2C to B2B in order to achieve scale and profitability faster.
The case is an opportunity to discuss the theoretical underpinning of creating impact in public markets, to explore how portfolio performance may be affected by Socially Responsible Investment (SRI) screens; and to understand drivers of demand for impacting investing more broadly. The case also explores the challenges the founders face when aiming to design a new product to meet an emerging need, and which distribution channel to choose for doing so. Teaching Note for HBS No. 218-064.

Keywords: socially responsible investing; investing for impact; robo-advisors; Investment; Values and Beliefs; Customization and Personalization; Technology; Financial Services Industry;

Citation:

Vallee, Boris, and Caitlin Reimers Brumme. "OpenInvest." Harvard Business School Teaching Note 218-089, March 2018. (Revised March 2018.) View Details

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Describes how Deutsche Bank, a leading European bank, is deciding whether or not to launch a new structured retail product in Germany: an autocallable note. Will this product find a market and how does it fit into the bank’s product portfolio? The case investigates how Deutsche Bank manufactures and distributes its structured retail products and more broadly explores the opportunities and challenges of offering financial products to households. The case also dwells on the scale and scope of the business of retail banking in an increasingly regulated environment.

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Exotic Interest Rate Swaps: Snowballs in Portugal

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