Asset: Market size Risk Purpose of funds

Treasury bonds $16.2 Trillion Interest rate Fund federal deficits

Municipal bonds $4 Trillion Credit and interest rate Municipal projects and deficits
Agency $600 Billion Interest rate Fannie and Freddie balance sheets

Mortgage debt
(Commercial) $4.2 Trillion Credit and interest rate Commercial real estate
(Residential) $10.9 Trillion Credit and interest rate Single family home ownership

Corporate bonds $9 Trillion Credit and interest rate Fund operations of firms
(Investment grade)
(Junk, high yield)
C&I Bank Loans $2 Trillion Credit Secured loan to firms
Leverage Loans $1 Trillion Credit Secured loan to firms

Collateralized assets
Real estate
(Residential) $30 Trillion Employment-economic Housing people
(Commercial) $15 Trillion Real estate rent Space for companies

Corporate equity
(Common shares) $30 Trillion Equity Market Fund firms with residual capital
(Preferred equity) $300 Billion Credit-interest rate Equity capital with fixed dividends

Asset Bank Securities $1.4 Trillion Credit Leases, auto loans and receivables

US dollar currency $1.4 Trillion Inflation and theft Transactions and liquidity
Pooled Investment Vehicles:

Vehicle: Size Risk Benefit of vehicle

Mutual funds (open):

(equity) $10.7 Trillion Equity (beta & market factors) Inexpensive equity diversification
(bond) $4.4 Trillion Credit and interest rate Inexpensive bond diversification
(balanced) $1.5 Trillion Equity and bonds Inexpensive portfolio diversification

Closed-end funds $300 Billion Varies by fund Management enrichment

Exchange Traded Funds (ETFs):

(equity) $3.2 Trillion Equity (beta & market factors) Diversification, tax and liquidity
(bond) $750 Billion Credit and interest rate Diversification, tax and liquidity

Private equity $2 Trillion Equity, liquidity and pricing Corporate efficiency

Hedge funds $3.1 Trillion Transparency and correlation Market efficiency
Venture Capital $300 Billion Most startups fail Funding of new companies
Bank deposits $11 Trillion FDIC Scale deposit investments
Money market funds $3.2 Trillion Credit (breaking the buck) Bank disintermediation

Partnerships
REITs (equity) $1 Trillion Real estate, financial Tax and RE exposure
Investable Assets Physical Financial Derivatives
Housing Stocks/equity/preferreds Eurodollar (rate futures)
Real Estate Bonds/loans/convertibles CDS (credit default swaps)
Energy oil-gas-power Mortgages Swaps
Food/water/wine Deposits (Currency) Warrants
Farms/Timber Insurance Convertibles
Art Mutual funds Options
Gold/silver/diamonds Leases Futures/forwards
Planes/trains/autos REITs Interest rate caps and floors

Uses Consumption/Survival Savings Leverage

Jewelry Investment Tax optimization
Energy Fund large projects Regulatory avoidance
Investment Government debt Insurance/protection
Transportation Intertemporal consumption Hedging
Investment Insurance Gambling
Vanity

Supply Finite/Limited Unlimited Unlimited

Net supply Positive Positive Zero

Investable? Depends on storage Yes Yes

Invest constraints Few/capital Capital Suitability

Ability to short? Very difficult Yes but costly Yes and inexpensive

Problem with shorting Borrowing physical Borrowing security Counterparty credit risk
Counterparty credit risk Short squeeze Unlimited losses
Unlimited losses Unlimited losses