Colin Fleury, Head of Secured Credit, London; Denis Struc and Ian Bettney, portfolio managers within the Secured Credit Team, discuss the merits of an allocation to asset‑backed securities (ABS) within diverse multi‑sector credit portfolios.

Summary:

  • At Janus Henderson we have long seen asset‑backed securities (ABS) as a valuable component of diverse multi‑sector credit portfolios; typically either instead of, or alongside investment grade corporate bonds. For example, since 2012 we have run a dedicated ABS sleeve within one of our diversified bond funds and the asset class has been an integral part of a multi-asset credit fund launched in the same year.
  • In this paper we explain our reasons for such allocations, the usual characteristics of ABS holdings and how they have performed through the Covid‑19 crisis to date. In a future publication, we will delve into the typical structural features of the holdings and the protections in place to deal with the broad macroeconomic impacts expected as societies globally seek to control the virus.