ABS vs. private credit: why ABS may offer a better alternative

InvestorDaily

While private credit is drawing strong interest, publicly traded asset-backed securities may offer a more compelling alternative, combining higher income potential with the liquidity, transparency and risk controls that institutional investors value. Although the private credit market, especially asset-backed finance (ABF), is attracting increasing investor interest, its inherent risks may warrant caution. Instead, we favour ABS, the publicly traded subset of ABF.

Our experience suggests these investment-grade instruments represent attractive alternatives for institutional investors seeking heightened income potential from diverse, unconventional debt securities. In our view, ABS backed by non-traditional collateral may present compelling opportunities for insurance companies and other institutional investors. Similar to ABF, our research indicates ABS have offered higher yield potential than other fixed-income securities while improving portfolio diversification.

The rest of this article can be found at investordaily.com.au.