Re: Rate of return should not be a mystery..
Thank you, Andre. This obviously illustrates a lack of transaprency tied to using complex products. Banks (Deustche Bank and Barclays) sold basket options to hedge funds like Renaissance Technlogies allowing them to do most of the trading but avoid billions in taxes.
From The Hill:
"Sen. Carl Levin (D-Mich.), one of the report's authors, said the accounts set up between hedge funds, such as Renaissance Technologies and banks such as Deutsche and Barclays, were "a series of fictions" that made it seem like the banks were trading a collection of stocks."
According to the article, the banks earned a $1 billion in fees administering the basket options transactions. Hedge funds booked $34 billion in profits.
The banks are quoted as saying this is legal and they cooperated with the investigation. Deutsche Bank stopped selling the product in 2010.
Unlike average investors, at least the hedge funds know their personal rate of return.