Residential Mortgage Backed Securities are a popular choice for wholesale investors. Here we explore some basic features of these securities and outline what makes them different to vanilla corporate bonds.
RMBS transactions come with contractual provisions designed to cope with the most dire conditions, here we review what should be front of mind for investors in RMBS transactions.
Here we look at how RMBS notes have performed over time, focusing on tranches that our clients have purchased and are still outstanding.
Investing directly or through managed bond funds has advantages and disadvantages; just like investing in shares, the decision depends upon the individual
There are a number of factors to consider when assessing a new bond investment – not just the return
Reality #6 Once bonds are issued they are traded in the secondary market. You can buy bonds that are close to maturity, say with one or two years to go. You don’t have to buy new issue bonds
Reality #5. If you invest direct, you have control over which companies you invest in, when you buy and sell bonds that may influence tax, the benefit of knowing when interest will be paid to you and how much will be paid. You can also take advantage of the natural maturity of bonds to have capital returned to you.
Myth #4 Fixed Income returns are low and will be a drag on my portfolio’s performance
If you’re unsure about bonds, this series of articles which delves into the “Seven Key Myths” may help. Myth #1 My portfolio consists of shares and cash and I don’t need a bond exposure
How do you maintain or increase your income without taking all the risk of equity capital price and dividend volatility?