The Case For U.S. Mortgage-Backed Securities For Global Investors
- Topics:
- Commercial Lending
- Tags:
- Finance,
- Financial Accounting,
- Financial Services,
- Fixed Income,
- Investment,
- Investor,
- State Street
- Source:
- State Street
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Overview: This article emphasizes about the U.S. Mortgage-Backed Securities for Global Investors. One of the most attractive features of MBS, and of prime importance to global investors, is their security. Mortgage-Backed Securities, whether explicitly guaranteed by the Treasury or by the two Government Sponsored Entities (FNMA and FHLMC), are generally considered by investors and rating agencies alike to be of the highest credit quality. A second attractive feature of MBS for investors is the broad liquidity of the sector. As interest rates have fallen to secular lows all fixed income investors have struggled with the challenge of searching for incremental return without sacrificing safety in their bond portfolios. This search for return has taken them outside traditional sectors, such as U.S. Treasuries, which provide relatively low yields, and Corporate Bonds, which have been littered with negative credit events. Mortgage-Backed Securities remain a sector that has so far been underutilized by many global investors, due to the complexity of their structure and cash flows. However, owing to their very attractive combination of excellent security, high liquidity, and incremental yield relative to Treasuries, it has become a worthwhile sector for global fixed income investors to consider as they seek to construct diversified, high-yielding, and high-quality portfolios.
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Format: PDF | Date: Feb 2003 | Pages: 1
