Please ensure Javascript is enabled for purposes of website accessibility Agency Mortgage-Backed Securities: A securitized products primer - Janus Henderson Investors - Australia II
For Institutional Investors in Australia

Agency Mortgage-Backed Securities: A securitized products primer

Portfolio Managers John Kerschner and Nick Childs and Associate Portfolio Manager Thomas Polus discuss how agency mortgage-backed securities (MBS) are created, their key characteristics, and what they might offer investors.

John Kerschner, CFA

John Kerschner, CFA

Head of US Securitised Products | Portfolio Manager


Nick Childs, CFA

Nick Childs, CFA

Head of Structured and Quant Fixed Income| Portfolio Manager


Thomas Polus, CFA

Thomas Polus, CFA

Associate Portfolio Manager | Securitised Products Analyst


Mar 22, 2024
14 minute read

Key takeaways:

  • The $9.8 trillion agency MBS market represents the second largest and second most-liquid bond market in the world, behind only the U.S. Treasury market.
  • With their defensive characteristics, additional yield over U.S. Treasuries, and high credit ratings due to their government backing, we believe an allocation to MBS may be a key strategic holding within a diversified portfolio.
  • Because agency MBS display a high level of idiosyncratic risk (risk that is particular to a specific investment) due to the large number of factors affecting their prices, we believe the asset class is well suited to active management.

 

Mortgage-backed securities are collections of residential mortgages with similar characteristics that are packaged together, or securitized, and sold to investors. Agency MBS are issued or guaranteed by one of three U.S. government or quasi-government agencies: Fannie Mae, Freddie Mac, and Ginnie Mae. Due to their government guarantee, all agency MBS carry the U.S. government’s AA+ credit rating.

Agency MBS make up about 27% of the Bloomberg U.S. Aggregate Bond Index and about 12% of the Bloomberg Global Aggregate Bond Index. Therefore, most investors with U.S. or Global Agg-like portfolios have exposure to agency MBS.

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All opinions and estimates in this information are subject to change without notice and are the views of the author at the time of publication. Janus Henderson is not under any obligation to update this information to the extent that it is or becomes out of date or incorrect. The information herein shall not in any way constitute advice or an invitation to invest. It is solely for information purposes and subject to change without notice. This information does not purport to be a comprehensive statement or description of any markets or securities referred to within. Any references to individual securities do not constitute a securities recommendation. Past performance is not indicative of future performance. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested.

Whilst Janus Henderson believe that the information is correct at the date of publication, no warranty or representation is given to this effect and no responsibility can be accepted by Janus Henderson to any end users for any action taken on the basis of this information.

John Kerschner, CFA

John Kerschner, CFA

Head of US Securitised Products | Portfolio Manager


Nick Childs, CFA

Nick Childs, CFA

Head of Structured and Quant Fixed Income| Portfolio Manager


Thomas Polus, CFA

Thomas Polus, CFA

Associate Portfolio Manager | Securitised Products Analyst


Mar 22, 2024
14 minute read

Key takeaways:

  • The $9.8 trillion agency MBS market represents the second largest and second most-liquid bond market in the world, behind only the U.S. Treasury market.
  • With their defensive characteristics, additional yield over U.S. Treasuries, and high credit ratings due to their government backing, we believe an allocation to MBS may be a key strategic holding within a diversified portfolio.
  • Because agency MBS display a high level of idiosyncratic risk (risk that is particular to a specific investment) due to the large number of factors affecting their prices, we believe the asset class is well suited to active management.