Rupin Banker claims that structured finance is a complex financial tool that has been gaining popularity recently. It refers to creating securities by pooling and repackaging cash flows from various financial assets such as mortgages, credit card debt, or student loans. The securities created through structured finance are designed to provide investors with a diversified investment portfolio that offers higher yields than traditional bonds.

Several key features of structured finance make it an attractive option for investors and issuers. Firstly, structured finance allows issuers to transfer risk from their balance sheets. By pooling together various assets, issuers can create securities backed by a diversified portfolio of assets. This means that the impact of any individual asset default is minimized, reducing the overall risk of the investment.

Secondly, structured finance gives investors access to a wide range of asset classes they may not otherwise have access to. For example, a small investor may not invest directly in a mortgage-backed security. Still, they can invest in a structured finance product that includes a pool of mortgages. Structured finance, therefore, provides investors with greater flexibility and diversification.

Another important feature of structured finance is its ability to create tailored investment products to meet specific investor needs. For example, structured finance products can be designed to offer different levels of credit risk, maturity dates, and cash flows. This means that investors can choose investments matching their risk appetite and goals.
Finally, structured finance allows issuers to raise capital at a lower cost than traditional bonds. By pooling various assets together, issuers can create securities with higher credit ratings than the underlying assets. This enables issuers to access cheaper funding than if they were to issue bonds directly.

In conclusion, structured finance is a powerful financial tool providing numerous benefits to issuers and investors. Its ability to transfer risk, provide access to diverse asset classes, create tailored investment products, and offer cheaper funding makes it an attractive option for those looking to invest or raise capital. However, structured finance is a complex area that requires careful consideration and expertise. Investors and issuers should therefore seek the advice of professionals before investing in or creating structured finance products.