Chart of the Week | July 05, 2021
Legacy Non-Agency RMBS Outperforms Other Fixed Income Assets
- Legacy Non-Agency RMBS outperform all other asset classes by over 2.5x over the past seven years.
- Legacy Non-Agency RMBS amortize meaning that every month the bond gets safer as underlying loans and mortgage deals de-lever.
- The combination of a robust housing market, market leading credit spreads, declining default rates, improving underwriting standards, uncorrelated returns, and positive selection bias (weaker loans already liquidated) all present legacy non-agency RMBS as a unique investment opportunity.