Is now the right time to consider diversifying into securitised credit?
Summary
Given recent market volatility and the downside risks facing credit spreads, investors are increasingly questioning the resilience of traditional fixed income allocations. March and April saw heightened turbulence across markets, while compensation for credit risk remains low by historical standards – leaving many corporate credit exposures vulnerable to adverse moves.
In this environment, securitised credit is emerging as a compelling diversification tool. Despite often being perceived as higher risk, these assets have shown defensive characteristics in recent periods of volatility. Their lower credit and interest rate duration – especially in floating-rate formats – helps dampen price swings and manage downside risk. For investors aiming to reduce credit duration and portfolio volatility, while still capturing attractive spreads, securitised credit offers a differentiated and timely alternative.