This week, Rusty and Robyn talk with Ricky Schneider, Vice President and Senior Portfolio Manager at Fort Washington Investment Advisors. In this episode, we take a closer look at Securitized Income and Structured Products. We break down these technical terms and explain what you should know about them. We will also discuss various Fixed Income segments, their value proposition and their risk. In addition, we will take a look at how the Securitized Market has changed since 2008, the outlook for the Fixed Income Market, commercial real estate and much more. Learn more at orion.com.

SHOW NOTES

Today Rusty & Robyn are joined by Ricky Schneider, Vice President and Senior Portfolio Manager at Fort Washington Investment Advisors. He is responsible for the commercial mortgage-backed securities portfolios for both Western & Southern Financial Group and third-party institutional clients. Schneider joined the firm in 2019. Prior to Fort Washington, he was with Mesirow Financial in Chicago where he was a Managing Director responsible for trading CMBS and other structured products. He also has previous experience at Loop Capital Markets, Lehman Brothers Asset Management, and Lincoln Capital Management.

Key Takeaways

  • [02:42] - Ricky’s professional background and what led him to the investment industry.
  • [03:57] - Fort Washington’s tagline is “uncompromised focus.” What is the significance of this for the firm and what really sets them apart in the industry?
  • [05:03] - A simple, functional definition of Securitized Income and Structured Products.
  • [06:05] - What are RMBS and CMBS and how do they differ? What about ABS?
  • [07:35] - What are CLOs?
  • [08:50] - How large are each of the above Fixed Income segments in terms of the overall Bond Market?
  • [10:01] - What is the value proposition for each of  these segments and why would investors choose these structured opportunities over treasuries or corporate bonds?
  • [11:07] - What are some of the risks when investing in this part of the Fixed Income market? What are some scenarios in which they might underperform the overall bond market?
  • [12:35] - How has the Securitized market changed since the Global Financial Crisis of 2008?
  • [15:41] - Does Ricky have a favorite idea in the Securitized Income sector?
  • [16:46] - What part of an investor’s bond allocation might this sector replace?
  • [17:51] - Rules of thumb for sizing a position of Structured opportunities within a Fixed Income allocation?
  • [19:08] - Why does Securitized Income work in an ETF structure and what are the advantages of this?
  • [20:38] - What to avoid and what to embrace in commercial real estate and CMBS?
  • [24:20] - What is Ricky’s favorite investment idea at the moment?

Quotes

[12:20 ] - “..There is also inherently more risk the further you go down the capital structure in any of these sectors we are talking about” ~ Ricky Schneider

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Disclosure(s) - Orion Portfolio Solutions, LLC, an Orion Company, is a registered investment advisor.

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