Securitized debt portfolios may invest in agency and non-agency securities including asset-backed securities (ABS), commercial mortgage-backed securities (CMBS), and residential mortgage-backed securities (RMBS). Depending upon the specific allocation, portfolios may be managed against indices such as the FTSE MBS Index, and the Bloomberg U.S. Securitized and MBS indices.
The securitized debt market dates back to the 1970s when the U.S. government pooled home mortgages to be repackaged as interest-bearing investment vehicles. The securitized market was eventually expanded to other types of asset-backed securities including corporate and sovereign loans, consumer credit, project finance, lease/trade receivables, and individualized lending agreements. Mortgages have remained a substantial portion of the securitized market, despite challenges faced amid the global financial crisis, and has grown from roughly $4 trillion to $11 trillion over the past twenty years. Positive developments resulting from the crisis, such as regulatory changes governing how residential mortgages loans are underwritten, packaged, and securitized have improved the landscape of the housing finance system, and have led to securitized debt regaining its footing among institutional investors.
Stone Harbor’s securitized debt capabilities date back to 1993 when securitized debt asset were managed as part of broader mandates. We launched a dedicated standalone track record in 2007.
We currently offer a flexible range of options within our Securitized strategy. Portfolios can be dedicated securitized debt separate accounts or pooled vehicles, or may be components of a broader investment grade or multi-sector credit portfolio.