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Senior Residential Mortgage-Backed Securities Asset Class:
The potential to generate meaningful yield and returns while diversifying from traditional fixed income risks
[/vc_column_text][vc_column_text]Legacy or seasoned senior RMBS were issued prior to the U.S. housing market collapse in 2007. Today, these bonds are supported by a resilient housing market, are backed by seasoned mortgages with lower LTVs, possess low interest rate sensitivity, and can benefit from refinancing/prepayment because they tend to trade at a discount.
Fundamentals
- Backed by residential mortgages, an asset many investors understand
- Provide the opportunity to diversify risk exposure
- Strong, resilient U.S. housing market has supported asset class
- A very large market opportunity where active managers can thrive
Incremental (from seasoned mortgages)
- Provides the opportunity for meaningful additional yield and returns
- Mortgages backing these bonds survived the housing market collapse of 2007 and are still paying today and they also have low loan-to-value
- Possess lower interest rate sensitivity
- Because Legacy Senior RMBS tend to trade at a discount, prepayments can benefit investors
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