Fund selectors are buying into asset-backed securities, labelling them one of the few remaining value trades in fixed income investing amid moves by the European Central Bank to support the sector.
Asset-backed securities (ABS), which bundle together pools of securities including credit card and mortgage debt, have been severely out of favour since 2008, with many blaming these instruments for their role in the financial crisis. But earlier this month, the ECB added support to an already strengthening investment case for ABS. ECB President Mario Draghi paved the way for the central bank to purchase “simple and transparent” asset-backed securities for the first time in a bid to kickstart lending to smaller and medium-sized businesses. Managers are increasing exposure to the...
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