Why we like the asset class investors love to hate

Forever associated with the 2008 Global Financial Crisis, mortgage-backed securities struggle to escape their bad rap. This is precisely why we are finding value in them now.

Adhering to the ‘buy low’ investment adage is tough when the world’s central banks are hoovering up almost every asset class in sight.

With rallies in government bonds, investment grade credit and equities all being fueled directly or indirectly through huge asset purchase programmes, there are fewer places where value can be found. One area that appears to have been overlooked, which are not being bought by central banks, is residential mortgage-backed securities (MBS). These investments, which are created by pooling a group of mortgages together, have a bad reputation given their role in the 2008/2009 Global Financial Crisis. Since governments globally are trying to keep their economies from cratering now, it's ...