George on Structuring Alternative Investments

At a Family Office Club interview, Richard C. Wilson speaks with George about alternative investments and Exchange Place.

Richard C. Wilson introduces George as a former CEO of a $10 billion hedge fund and a representative of Exchange Place, then previews a discussion of alternative investments and structured notes. George explains what he sees changing in access to alternative assets, describes Exchange Place's fractionalization approach, and discusses how deal structures can combine assets, shape risk and support pricing.

In this video: Richard C. Wilson (Family Office Club host), George (Exchange Place guest)

What they said

1. Pairing bonds with risk assets. George says Exchange Place is creating notes or funds that pair zero coupon Treasury bonds with a risk asset. He says the bonds are intended to try to assure investors they will get their principal back, with limited exceptions such as a custodian bank failing. (at 11:22)
2. George on manager fees. George argues that squeezing fees from young managers can work against them. In his view, gatekeepers should consider a strategy and its operating costs before negotiating fees and expenses. (at 16:26)
3. Ownership can build an audience. George says owners of a sports or entertainment asset may become fans and brand ambassadors. He also describes broad investor interest as a way to test whether an asset appeals to an audience. (at 19:39)
4. Securitization can add liquidity. George says securitizing an asset can enhance its liquidity and tradability, subject to fitting within the appropriate regulations. He says breaking a security into components can also help with valuation and pricing. (at 25:43)

In their words

"So, I think people consider the basic investments to be stocks and bonds and some portfolio of stocks and bonds."

"we're not an issuing bank, so we don't have a double A or AAA credit rating"

Why it matters if you are building or preserving great wealth

George says some people who bought a few hundred dollars of a racehorse went to Saratoga or flew to California to watch it. He says even small ownership can lead to spending on travel and merchandise.