Investors in the non-agency secondary mortgage markets are now looking at opportunities across asset classes, according to Barclays Capital.
“Since 2009, non-agency RMBS and CMBS have posted extraordinary price returns,” said Barclays analysts in an email late Friday. “We believe more investors are now focusing on both asset classes and need to make allocation decisions.”
Both these sectors went through a period of issuance growth in 2003-06, according to the note.
From 2006 to 2009 both asset classes went through a long period of underperformance and asset sales.
“Since then, both have attracted wide-ranging interest from alternative as well as traditional money managers,” they said. “Both markets have posted very substantial price gains since mid-2009.” Prices in the non-agency RMBS space are now 60-80% higher relative to the March 2009 bottom, they point out.
The analysis also highlights the nuances of each asset class. For example commercial real estate prices are lately more volatile than residential.
Also, investors who traditionally picked either asset class may be moving into other markets, but remain largely disconnected from one another. Barclays is hoping to bridge this gap.