Patent ID: 8121925

Claim:
A computer-implemented method for managing an investment company, comprising: (a) receiving funds into the investment company from a plurality of investors who, in return, receive shares or interests in the investment company for their investment; (b) approving, by the investment company, a counterparty that wants to acquire asset exposure by means of a swap and credit terms for the counterparty, including a derivatives position limit, using the computer programmed to evaluate at least the creditworthiness of the counterparty; (c) receiving, from the counterparty, a proposed swap including an identification of one or more reference assets to which the counterparty wants to acquire exposure; (d) approving, by the investment company, the proposed swap using the computer programmed to evaluate the proposed swap based on availability of the one or more reference assets identified by the counterparty and on transaction terms of the proposed swap; (e) after steps (b)-(d), purchasing the one or more identified reference assets with the funds and executing with the counterparty the proposed swap associated with the one or more identified reference assets, wherein these trades and contractual obligations are processed and confirmed by the computer and wherein said purchasing and executing are performed in a manner that precludes the investment company from holding an unhedged position with respect to the one or more identified reference assets which process enables the investment company to eliminate market risk on its shares; (f) repeating steps (b)-(e), whereby a plurality of swaps are executed and processed by the computer with a plurality of different counterparties; (h) with each counterparty with whom the investment company has executed at least one swap, periodically exchanging for each swap executed with said counterparty, a net difference resulting (i) from an obligation to pay to the counterparty a total return on the one or more reference assets associated with the swap including distributions thereon and (ii) from a right to receive from the counterparty a payment including a finance payment based on a swap rate applied against a market value of the one or more reference assets associated with the swap and a payment for any decline in value thereon, wherein the net difference is calculated using the computer programmed to calculate the net difference; and (i) periodically paying an investment return to each of the investors calculated by the computer as using at least proceeds from the finance payments received in connection with the executed swaps, which return on the shares of the investment company purchased by investors will have no market risk as enabled by the method for managing the investment company.