SWIP's McKernan buys into unloved asset-backed securities

Daniel McKernan, lead manager of SWIP's £174m European Corporate Bond fund, is buying into ‘unloved' asset backed securities (ABS) to exploit cheap valuations.

The head of UK and European credit has been gradually adding to ABS for the past month and aims to reach an overweight position of around 2%-3% versus the index, financed through a selective reduction in his bank positions. “While this is not our maximum position in ABS, we feel is the optimum weighting given the other themes running through the portfolios,” he says. “There are still good long-term opportunities to be taken advantage of,” he says. ABS fell out of favour with investors during the global financial crisis. It is known for being notoriously hard to research, posing inc...