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Asset-Backed Securities

Observant1
edited October 4 in Fund Discussions
Asset-Backed Securities (ABS) have become increasingly popular.
It's a large market that many investors don't have much exposure to.
ABS spreads are relatively appealing compared to corporate bonds.

"In the past, the most attractive time to venture into the sector has been when the consumer is stressed,
such as during the regional-bank crisis in the spring of 2023, says Saccocia.
There may be better opportunities ahead, she notes."

"But, for now, relative to corporate credit, many investors find the high credit ratings,
yields, and ample liquidity (at least among ABS) worth considering, says Seth Henry,
a portfolio manager at Sage Advisory."

The following funds were mentioned:
Janus Henderson Asset-Backed Securities
Janus Henderson Multi-Sector Income
Janus Henderson Securitized Income ETF
Pimco Multisector Bond Active ETF
DoubleLine Asset-Backed Securities ETF
Neuberger Berman NB Asset-Based Credit (interval fund)
John Hancock CQS Asset Backed Securities (interval fund)

https://www.msn.com/en-us/money/other/asset-backed-investing-moves-mainstream/ar-AA1NMnuv

Comments

  • sma3
    I am leery of this class in general in a slowing economy with increasing consumer stress, especially auto loans etc.

    If the manger is exceptional, may work out, but i would be cautious and these things will probably be a lot cheaper in the near future
  • WABACWABAC
    sma3 said:

    I am leery of this class in general in a slowing economy with increasing consumer stress, especially auto loans etc.

    If the manger is exceptional, may work out, but i would be cautious and these things will probably be a lot cheaper in the near future

    Just google sub-prime auto lending. Even Ford is getting in on it for their F-150's.

    Anything north of 20-25% for ABS in a fund and I pass it by unless it's Fed MBS's. Seems like a lot of these specialized ABS funds are too new to have been through a recession--not counting the covid panic.

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