In a Gryphon Insight last October we noted we had been tactically positioning all our portfolios (including GCI) with a strong defensive bias. This was in anticipation of a weaker investment environment including elevated market volatility. Escalating geopolitical tensions culminating in Russia’s invasion of Ukraine have compounded an already fragile market facing reduction in central bank liquidity, inflation and uncertainty regarding the pace and timing of interest rate increases. In Australia, add to all that moderating house prices and now floods.
Despite all this uncertainty, our deep lens into the domestic mortgage landscape reveals certainty around borrower affordability and we see no reason why the RMBS & ABS sector can’t continue to prosper in delivering the highest returns for the risks involved.