Structured credit is a large and diverse cross cycle investment opportunity that is often under-represented in financial advisors portfolios.
U.S. Bond Market $44.3 Trillion*
- Securitized Credit11,229
- Money Market1,045
- Federal Agency1,826
Agency Debt 4%
Click sections to view breakdown
ABS $986 Billion
CLO/CDO Securities $814 Billion
Non-Agency RMBS Securities $1099 Billion
CMBS Securities $543 BB Non-Agency / $648 BB Agency
*Source: SIFMA, Federal Reserve as of Q4 2019; Non-agency structured credit as of Q3 2019 | **SIFMA as of Q3 2019
1WS INVESTMENTS PROFILE
We focus primarily on a subset of Asset Backed Securities and other Structured Credit with a demonstrated ability to extract attractive cross-cycle risk premiums typically not offered via generic fixed income exposure.
We concentrate on cross-over and below investment-grade structured securities to capitalize on our fundamental credit and capital structural expertise to identify nuanced structural features that can deliver idiosyncratic return opportunities.
Structured Credit Asset Types
Asset Backed Securities are collateralized by loans or leases on a myriad of alternative consumer, commercial, or whole business assets. Among the more common consumer based ABS are auto loans and student loans while commercial ABS include loans and leases on assets such as shipping containers and aircraft.
Debt issued by two types of entities: 1) Government Sponsored Enterprises (GSEs), usually federally-chartered but privately-owned corporations; and 2) Federal Government agencies which may issue or guarantee these bonds—to finance activities related to public purposes.
Sometimes referred to as corporate ABS, Collateralized Loan Obligations and Collateralized Debt Obligations are securitized from pools of debt securities. CLOs are backed by 1st lien corporate loans, often referred to as bank loans or levered loans. CDOs are backed by various interest bearing debt instruments including bank trust preferred securities “Trup CDOs”, CRE debt, REIT debt among others.
Commercial Mortgage Backed Securities are bonds collateralized by loans on commercial and multifamily (5+ family) real estate. Underlying properties include apartment buildings, office buildings, retail centers and malls, industrial complexes, hotel and lodging properties among others.
Debt issued by companies to raise capital.
Short term debt securities that mature in less than one year.
Municipal debt issued by a state, municipality or a county to finance its capital expenditures.
The Fund may also invest in various other debt obligations, such as mezzanine, senior secured and unsecured bonds/ loans and other income-producing investments.
Residential Mortgage Backed Securities are bonds collateralized by loans on 1-4 family residential real estate with a wide range of underlying maturities, mortgage rates and credit quality. The RMBS market is the largest subsector within structured credit.