The Collaborative Market Data Network -
serving the Public interest of Transparency in Debt Capital Markets
The Collaborative Market Data Network
Serving Transparency in Capital Markets
The Collaborative
Market Data Network

MBS: ATTRACTIVE RETURNS, MINIMAL CREDIT RISK, AND WHEN HEDGED LOW CORRELATIONS TO OTHER ASSET CLASSES

Post Date: 16 November 2023

Mortgage Backed Securities are a unique asset class within fixed income where the primary source of risk is prepayment risk rather than credit risk. The market is inherently inefficient as the de-risking process undertaken by major investors creates an abundance of by-products. With no natural home these financial products are cheap. With sufficient diligence investors can gain an information edge which has become extremely scarce in other markets.


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