Securitised debt4 in the current context of fixed income investing
An unconstrained strategy invests opportunistically across sectors and geographies in the fixed income universe, allowing investors to go beyond traditional bonds in their search for yield based on their investment objectives and risk appetite. For example:
- Significant asset diversity5 (auto and consumer loans). The US consumer is well-supported by low unemployement and continued economic growth
- Residential mortgages with US government backing
Overall, it is worthwhile for investors to be mindful of the risks before investing in the securitised debt market. Nonetheless, investment risks could be managed through diversification5 with the help of an active manager.
1. Source: “The rebirth of securitisation: Where is the private label mortgage market?”, Urban Institute, September 2015.
2. Source: FactSet, FRB, J.P. Morgan Asset Management, Bureau of Economic Analysis. Data include households and non-profit organisations. First quarter 2019 figures for debt service ratio is J.P. Morgan Asset Management estimates. Past performance is not a reliable indicator of current and future results. Data reflect most recently available as of 31.03.2019.
3. Source: US Securities and Exchange Commission (http://www.sec.gov/spotlight/dodd-frank/assetbackedsecurities.shtml).
4. For illustrative purposes only, exact allocation of portfolio depends on each individual’s circumstances and market conditions.
5. Diversification does not guarantee investment return and does not eliminate the risk of loss.
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