- 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.
Portfolio Manager John McClain, CFA, joins us to discuss recent developments in the high yield market and how volatility can provide opportunity for investors focused on security selection. After the difficulties of the previous month and the rough start to November, our high yield team believes that opportunities have been uncovered if investors focus on long term fundamentals.