Borromeo doubles RMBS exposure in Legg Mason Income Optimiser

Regina Borromeo has more than doubled exposure to mortgage-backed securities in the Legg Mason Income Optimiser fund since the start of the year as a play on the housing recovery in Europe.

The co-manager of the £138m fund has increased allocation to residential mortgage-backed securities (RMBS) from 4% at the end of last year to a current level of 10% in anticipation of house price appreciation in Europe. "Most of the increase has been through European RMBS as we see the housing dynamics improving in Europe, especially in Spain," Borromeo (pictured) said. "We expect to start seeing house price appreciation as well as yield and spread compression relative to covered and sovereign bonds, especially since asset-backed securities [ABS] are part of the credit solution in the...