Finding yield is a never-ending quest for fixed income investors. One overlooked way is through securitized assets, which can be a compelling option for investors looking for additional yield on the shorter end of the curve.

 

Benefits of securitized assets:

• Credit enhancements provide investors with additional protections
• Flexibility to invest in a specific tranche depending on duration needs
• Regular principal payment features (e.g., mortgages, car payments, credit card payments) produce cash flow

 

Portfolio manager, Henry Song, CFA, discusses the advantages of investing in securitized assets and how some of their unique attributes can enhance investors' yield potential in his piece Finding Differentiation in Securitized Assets.

 

 

Author:

Henry Song, CFA
Portfolio Manager
Diamond Hill Core Bond and Short Duration Securitized Bond strategies
Diamond Hill Capital Management, Inc.