Total Return Swaps used as method for establishing passive bond market exposure

Ref, R 22 pg 102, Cfa curriculum

Several considerations may offset these benefits (of using a total return swap) in a number of instances…

Second, as a funding cost arbitrage transaction, the TRS can allow investors to gain particular access to subsets of the fixed-income markets, such as bank loans or high-yield instruments for which cash markets are relatively illiquid or the cost and administrative complexity of maintaining a portfolio of these instruments is prohibitive for the investor.

How can this be a drawback of using the TRS?



It is not. Are you sure it is listed as a constraint?

TRS to my understanding are an easy way to gain passive exposure to a market that is difficult or costly to get a direkt exposure to