AAdvisors are finding it increasingly difficult to rely on their traditional fixed income portfolios to fulfill the dual role of generating income and providing true portfolio diversification. Focusing only on US Treasuries and corporations means advisers are missing out on a huge chunk of the bond market – the $ 12 trillion market for securitized assets.
In the next webcast, Securitized assets for income and diversification, Lee Giunta, Client Portfolio Manager at Manulife Investment Management, and David A. Bees, Portfolio Manager of Securitized Assets, as well as Chad Bucur, ETF Specialist at John Hancock Investment Management, will explore how asset-backed assets mortgages and other securitized assets can supplement traditional allocations.
Specifically, the recently launched John Hancock Mortgage Backed Securities ETF (JHMB), which is under-advised by Manulife Investment Management (US) LLC, an asset manager affiliated with John Hancock Investment Management, can help fixed-income investors access the mortgage-backed securities space.
The John Hancock Mortgage-Backed Securities ETF is actively managed and seeks a high level of current income while seeking to outperform the benchmark over a market cycle. Under normal market conditions, the fund invests at least 80% of its net assets (plus any borrowing for investment purposes) in mortgage backed securities. The fund may invest in mortgage related securities issued or guaranteed by US government entities and mortgage related securities issued by the private sector. These may include residential mortgage-backed securities, commercial mortgage-backed securities and advertised mortgages, and may be rated investment grade or less.
“Actively managed ETFs that invest in Mortgage Backed Securities (MBS) can complement core fixed income portfolios with traditional exposure to US Treasuries and investment grade corporate debt. Securitized assets cover a diverse group of sub-sectors offering income and diversification, but are often overlooked by investors, ”according to John Hancock Investment Management.
MBS and securitized assets are fixed income securities backed by various cash flow generating assets. Issuers of securitized products pool these assets and sell debts to investors that are collateralized by the loan pool. Investors are entitled to payment of the principal and interest generated by these assets. MBS are a type of securitized asset and are backed by residential and commercial mortgages. Agency MBS are the most well-known securitized asset issued by Fannie Mae, Freddie Mac and Ginnie Mae.
Financial advisers who want to know more about securitized assets can register here for the Monday November 1st webcast.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.