Total return swaps (TRSs) are sometimes undertaken between banks who can access an asset on-balance-sheet and funds that lack access to, or are not allowed to, hold the asset. In such a situation,

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In a total return swap, the bank effectively lends the use of its balance sheet to the fund, allowing the fund to benefit from the returns of the asset without having to hold it on its own balance sheet. The fund pays the bank a fee for this service. The bank does not necessarily enhance its credit exposure or returns; it is simply providing a service to the fund.

Total Return Swaps (TRSs) Are Sometimes Undertaken Between Banks Who