Investors looking for income in the current environment may turn to securitized products, according to Brian Warren, chief investment officer and portfolio manager at TCW, a Los Angeles-based TCW. Investors will now be in the “waiting area” for the next few months as the economy is being organized, Hollen said. The outcome is still uncertain, but Whalen believes the economy is likely to be weaker than the market expects. However, in many parts of the bond market, investors are not compensated for credit risk, he said. Key inflation data was released this week, with the May consumer price index scheduled for Wednesday, with the producer price index being released on Friday. “Everything is fine, everything can go well, it’s landing, there’s no analogy for landings or all (them) planes. But if that’s the case, it seems that it’s already built into what you’re paying to take risks like corporate bonds and high-yield bonds.” “If not… I feel like it needs to be re-registered.” The money manager is on the TCW team that oversees more than $170 billion in bond assets. While the company has a wealth of credit, securitized assets are relatively inexpensive, he said. The latter accounts for about two-thirds of the assets of TCW Flexible Income ETF (FLXR), co-managed by Whalen. FLXR YTD MOUNTANE TCW Flexible Income ETF ETF Previously, as of May 31st of the Exchange-Traded Fund, it has a 5.9% 30-day SEC yield and an expense ratio of 0.4%. It aims to generate consistent revenue and lead to long-term capital gains, and rather than replacing it, it aims to complement traditional fixed income portfolios, Whalen says. “We are trying to balance the idea of ​​total value. This keeps high quality, stays liquid and allows for future bond market dislocations. “From our perspective, the best way to do that is high quality securitization (liabilities), which offers decent spread levels and decent compensation.” The allocation to portfolio collapsed securitized assets is distributed between agency mortgage-backed securitized securitized securitized securitized securitized securitized securitized securitizations (MBS) from agents, institution-free mortgages, asset-backed securitizations, and securities supported by commercial malt loans. Agency MBs, primarily from Fannie Mae, Freddie Mac and Ginny Mae, are essentially the highest quality assets you can buy after your finances. These securities are expected to benefit from “in an environment where yields are still bouncing, and you are not going to expect it to tighten — but you can earn a decent income while you wait for a final improvement in price.” For trade to work, he pointed out, it must have a long-term view that interest rates will fall at some point and volatility will sink. “We’ll go through the ‘waiting location’ and perhaps reach a stable yield curve that should bring buyers who have certainly been pulled back from the market over the past few years,” he added. Non-ministerial mortgages are less volatile because of their low sensitivity to interest rates, he noted. Asset-backed securities, on the other hand, are essentially compilations of many different subasset classes. “Asset-backed securities allow you to adjust the specific accounts receivable you want to be exposed, and you can choose which part of your capital structure to receive payment,” Whalen said. “For us, we are defensively leaning, so buy a good structure at the top of the capital structure and call it about 100 basis points than the SOFR.” Protected overnight funding rate (SOFR) is the benchmark interest rate for bonds and loans. In this area, Whalen likes Secured Loan Obligations (CLOS), a pool of floating loans to businesses. He supports the close ties to detached home rental loans, data centers and assets associated with electrification of the economy. Finally, there are still “basic dark clouds” hanging in the commercial MBS sector due to office real estate outlook, but there are still areas of opportunity, Whalen says. He particularly likes assets that focus on a single property rather than a pool of many properties. “When you buy these bonds, especially at the top of the capital structure, these underlying loans do not allow a lot of upfront risk,” he said. “Prices and spreads don’t really cause the volatility of interest rates,” he noted, and for the top layer of the capital structure, you can also earn around 100-200 basis points via Treasurys.
Where TCW CIOs are seeing the best income opportunities right now
