FICC Focus Diamond Hill’s Song on Credit Outlook, Landscape: Credit Crunch
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Dec 27, 2024 Henry Song, a portfolio manager at Diamond Hill Capital Management specializing in short duration securitized bond strategies, shares insights on the fixed income landscape. He discusses the advantages of shorter-dated bonds amid high interest rates and inflation challenges. The conversation dives into the intricacies of securitized markets versus corporate bonds, highlighting opportunities in asset-backed securities. Additionally, Song touches on the evolving role of technology in trading and the strategic importance of diverse portfolio construction in today's volatile market.
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Career Journey and the 2008 Crisis
- Henry Song's career began in 2005 at JP Morgan, focusing on mortgage-backed securities and interest rate swaps.
- He gained valuable experience during the 2008 financial crisis by managing portfolios from failing firms, providing exposure to diverse mortgage types.
Post-Crisis Opportunities in Securitized Market
- The post-2008 financial crisis landscape saw a rise of specialized lenders due to regulatory changes like Dodd-Frank.
- This presented opportunities in the asset-backed securities market, particularly in non-indexed sectors.
Spread Pickup in Securitized Products
- Securitized products offer higher spreads than corporate bonds due to structural factors.
- These factors include less investor attention, lack of index inclusion, and complexity, creating opportunities for discerning investors.