The perception of mortgage-backed securities (MBS) took a serious hit between 2007 and 2009. Some investors still mistrust the entire asset class, but this could be a mistake, writes Gary Singleterry, investment director at GAM.
Not only has the MBS market notably changed, but these securities provide investors a valuable alternative to the minimal, or even negative rates on offer from traditional high quality bonds. US mortgage credit risk is currently attractive. After bottoming out at 63.4% in summer 2015, the US home ownership rate has been gradually increasing. January and February of this year saw the Case-Schiller Home Price index rise gradually, indicating that there was neither an excess nor shortage of homes for sale - the market has reached Goldilocks levels. Construction of new single-family homes...
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