Securitized Credit provides exposure to a diversified pool of assets: each loan or asset in a typical portfolio represents a small portion of the entire collateral, meaning that there is no large single name obligor exposure taken by investors.
In an environment where it is increasingly likely we see some prevalence of idiosyncratic credit issues, Securitized Credit provides a margin of safety.
While this has always been true of Securitized Credit, now is a particularly attractive time to invest in the asset class for 3 key reasons:
- Cushion to defaults
- Lag versus broader markets
- Heavy primary supply