Securitized Fixed Income
The strategy seeks to invest across securitized mortgage sectors, targeting a different fundamental risk premium that is generally unavailable in other areas of fixed income. Over the past decade, in the manager’s view, securitized sectors have offered attractive relative value compared with corporate or government sectors. From a portfolio construction perspective, securitized sectors can also offer relatively low correlation to other asset classes.
Since the subprime crisis in 2008, many investors have understandably tended to avoid many areas of the securitized market, making the manager’s expertise and resources in these areas a point of differentiation. The manager uses a number of strategies for risk management and alpha generation — including derivatives, hedging, and leverage — to pursue a high absolute return target.
The strategy has flexibility to invest across the securitized value chain, including direct whole loan investments. In pursuing this broad universe of opportunities, mortgage credit and prepayment risk will be the focus. The strategy also seeks to utilize a variety of funding sources available by optimizing between financial and structural leverage.
Michael V. Salm
Co-Head of Fixed Income
At Putnam since 1997. Industry since 1989. Prior experience as a Mortgage Specialist at BlackRock Financial Management, a Vice President and Trader at Nomura Securities, a Vice President and Structurer at Nikko Securities, and an Analyst at Fitch Investor Services. B.S., Cornell University.