Total Return Swap

A Total Return Swap (TRS) is a financial agreement between two parties where one party (the "total return receiver") receives all the financial gains or losses from an asset, like a stock or bond, while the other party (the "total return payer") pays a regular fee, usually linked to interest rates. This means the receiver gains from any appreciation in value and income from the asset, while the payer retains ownership. TRSs allow investors to gain exposure to assets without actually owning them and can be useful for hedging or leveraging investments.