Portfolio Manager John McClain, CFA, joins us to discuss why we find the BBB segment of the fixed income market compelling and where opportunities lie in the space.
- The mortgage-backed securities market has grown into a diverse market, offering investors a multitude of differentiated products to meet specific needs.
- Agency and non-agency mortgage-backed securities have historically provided attractive yields and high credit quality, as well as a wide variety of available securities.
- The market is complex and ever-evolving, but there are opportunities for managers to leverage different types of mortgage-backed securities to mitigate risk.
- At Diamond Hill, we believe security selection is key and apply a bottom-up approach to identify, and capitalize on, market inefficiencies.
- Growth in the asset-backed securities (ABS) market over the past 10 years has provided diversification and strong risk-reward characteristics in a sector largely ignored by the Bloomberg Barclays U.S. Aggregate Index.
- As growth in some historic sectors of the ABS market slows, the emergence of new securitization sectors has expanded the opportunities available to investors.
- The Diamond Hill fixed income team is able to exploit some of the pricing inefficiencies in the ABS market through our bottom-up analysis, along with our deep understanding of deal structures and the companies bringing them to market.