Talking heads – There is resilience in asset-backed securities

3 AUTHORS Markets

06/27/2022 1 min read

Asset-backed securities backed by loans and other credit, from auto loans to business loans, face the same challenges as other fixed-income segments. These include tighter central bank policy, volatility in inflation expectations and concerns about growth.

However, in their favour, high-quality ABS derive some resilience from the generally short duration of the underlying assets as well as a cushion against economic shocks, for example, in the form of generally strong interest coverage or low blocked funding. costs.

Listen to this talking heads podcast with senior portfolio managers David Favier and Olivier Boutoille and Daniel Morris, chief market strategist. They first discuss the current market environment before focusing on the benefits of investing in these floating rate instruments which offer varying risk/reward profiles for investors.

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Please note that articles may contain technical language. For this reason, they may not be suitable for readers without professional investment experience.

All opinions expressed herein are those of the author as of the date of publication, are based on available information and are subject to change without notice. Individual portfolio management teams may have different views and make different investment decisions for different clients. The opinions expressed in this podcast do not constitute investment advice.

The value of investments and the income from them can go down as well as up and investors may not get back their initial investment. Past performance does not guarantee future returns.

Investing in emerging markets, or in specialized or restricted sectors is likely to be subject to above average volatility due to a high degree of concentration, greater uncertainty as less information is available, there is less liquidity or due to greater sensitivity to changes in market conditions (social, political and economic conditions).

Some emerging markets offer less security than the majority of developed international markets. For this reason, portfolio transaction, liquidation and custody services on behalf of funds investing in emerging markets may involve greater risk.