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...
To continue reading this article...
Join Investment Week for free
Signup and gain exclusive members-only insights - all free of charge!
- Unlimited access to real-time news, analysis and opinion from the investment industry, including the Sustainable Hub covering fund news from the ESG space
- Get ahead of regulatory and technological changes affecting fund management
- Important and breaking news stories selected by the editors delivered straight to your inbox each day
- Weekly members-only newsletter with exclusive opinion pieces from leading industry experts
- Be the first to hear about our extensive events schedule and awards programmes
