The Case for Senior Residential Mortgage-Backed Securities

Senior Residential Mortgage-Backed Securities Asset Class:
The potential to generate meaningful yield and returns while diversifying from traditional fixed income risks

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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Michael Schoonover, COO & Portfolio Manager
Michael Schoonover, COO & Portfolio Manager
Michael Schoonover is Chief Operating Officer of Catalyst Capital Advisors LLC, Catalyst International Advisors LLC and Rational Advisors, Inc. He is an experienced financial professional having worked in various portfolio management, operations management, and trust officer roles. He serves in various executive roles for U.S. registered investment advisers and marketing and consulting companies in the investment management industry. He is President of Mutual Fund Series Trust, President of Mutual Fund & Variable Insurance Trust, and President of Strategy Shares. Mr. Schoonover has a Bachelor of Science degree in biochemistry from the University of Michigan and a Master of Business Administration degree with high distinction from the University of Michigan.

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