The Concealed Dangers of Mortgage Funds. Retail investors are money that is pouring “bank loan” funds at accuprice documentation rate, together with longterm implications are cringe worthy.
The rationale and popularity for investor interest has many merit, but just at first glance. The thinking goes that interest levels are nevertheless at historically lower levels, and investors are reticent to battle rate of interest danger by means of longer duration bonds.
Loans, commonly described as drifting price funds, are seen by many people investors as supplying a modest revenue stream while being generally without any rate of interest danger. Appears great, appropriate?
Regrettably this narrative is not very true as well as the increase in popularity has generated an incredibly poor outlook that is risk/reward holders.
Increase in popularity
As described above, investors are searhing for refuge from prospective increases in rates of interest by piling into mortgage funds. (more…)