Fatima Luis, the manager of three bond funds at F&C, has added stakes in several asset-backed securities (ABS) over the summer. “We have added positions in transactions with strong sponsors and at the top of the capital structure where applicable,” she says.
According to Luis the perception of credit risk of securities of this nature has been exaggerated. “This inefficiency has created attractive opportunities,” she says. However, she adds, the liquidity of high-quality ABS is currently inferior to corporate bonds, meaning ABS will only ever comprise a controlled portion of the funds.
Luis manages the F&C Extra Income Bond, the F&C Strategic Bond and the F&C Maximum Income Bond.
Tesco Property Finance was one of the first commercial mortgage backed securities to come to the market successfully in Europe since the collapse of Lehman, and is now 0.8% of the Strategic Bond and the Extra Income Bonds.
BL Superstone Finance, a vehicle based on the securitisation of British Land and jointly owned by Sainsbury’s and Waitrose supermarkets, represents 0.7% of the portfolios.