Structured Investment Vehicle Definition
Structured Investment Vehicle (SIV) means a pool of investment assets established to earn a spread between assets and liabilities like a traditional bank. It borrows money by issuing short-term securities and then lends that money by buying longer term securities at higher interest rates. The SIV earns profits on the spread between incoming cash flows and the high-rated papers that it issues. SIVs are less regulated than other investment pools. They gained much attention during the subprime fallout of 2007 as many investors were caught off guard by the losses because little was publicly known about the specifics of SIVs.