Traditionally, asset managers and banks need to deploy large investment to achieve return at scale. The universe of investments has thousands of large investment opportunities and millions of small investment opportunities. Thus we can describe the distribution of investments to be a “Long tail distribution” similar to retail. Traditionally, asset managers have focused on the head of the tail such as corporate credit and sovereign bonds for various reasons including scarcity of time.

In the 1970s, bankers saw an opportunity to bring these many small investments to large institutional players by packaging mortgages into collateralized mortgage obligations. As a result…

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