04 Aug 2025
Given the nature of the underlying collateral, the European ABS sector offers access to different consumer-driven and ‘real economy’ risks, diversifying from corporate credit.
Key takeaways:
Although known by numerous names based on the type of assets that back them, asset-backed securities (“ABS”) or securitisations are ultimately all securities made up of discrete pools of common assets.
Securitisation structures can be thought of as analogous to a “mini bank” that makes only one type of loan. Like a bank it funds these loans via a mixture of different classes of debt and equity (each with different risk and return profiles). However, securitisation has a number of positive distinguishing features versus a typical bank:
In this Case for ABS, we take a deep dive into the sector and evaluate each of its distinguishing features that enable the asset class to be combined successfully with other fixed income in diversified portfolios.
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