Pimco pumped on Freddie, Fannie debt

Pimco pumped on Freddie, Fannie debt
Pacific Investment Management Co. says investors should buy Fannie Mae and Freddie Mac mortgage-backed securities that slumped in response to planned changes to the government-supported companies' refinancing rules.
NOV 04, 2011
Pacific Investment Management Co. says investors should buy Fannie Mae and Freddie Mac mortgage-backed securities that slumped in response to planned changes to the government-supported companies' refinancing rules. “If you didn't sell them two months ago and you're selling them today, you deserve to be fired,” Scott Simon, the mortgage head at Newport Beach, Calif.-based Pimco, which runs the world's largest bond fund, said today in a telephone interview. The bond fund manager joined analysts at Amherst Securities Group LP and BNP Paribas SA in saying the consequences of an expansion to the Home Affordable Refinance Plan announced yesterday may be less damaging than some investors anticipate. The market slumped yesterday as investors braced for a wave of refinancing amid President Barack Obama's bid to stoke the economy by helping more homeowners cut loan payments. Fannie Mae's 6% 30-year fixed-rate securities declined by almost 0.7 cent on the dollar yesterday to about 109 cents, underperforming Treasuries by the most in 20 months, after the Federal Housing Finance Agency outlined the changes to the HARP program for loans guaranteed by the company or Freddie Mac to borrowers with little or no home equity. The debt, which reached almost 111 cents on Sept. 1, climbed to 109.2 cents as of 11:28 a.m. in New York today, outperforming U.S. government notes, according to data compiled by Bloomberg. Interest rates on the underlying mortgages average about 6.5%, compared with the average rate on new home loans of about 4.2%, according to Bankrate.com data. Pimco boosted mortgage securities to 38% of assets in its $242 billion Total Return Fund in September, the most since January, from 32% the prior month, according to data on the firm's website. Simon declined to say how much of the increase was tied to government-backed agency mortgage securities or other securitized debt. --Bloomberg News--

Latest News

How firms can support advisors during difficult market times
How firms can support advisors during difficult market times

For service-focused financial advisors who might take their well-being for granted, regular check-ins and active listening from the top can provide a powerful recharge.

Savant Wealth targets Silicon Valley with Parkworth acquisition
Savant Wealth targets Silicon Valley with Parkworth acquisition

With Parkworth Wealth Management and its Silicon Valley tech industry client base now onboard, Savant accelerates its vision of housing 10 to 12 specialty practices under its national RIA.

RIA moves: PE-backed Arax strengthens Midwestern presence with Summit Wealth Strategies
RIA moves: PE-backed Arax strengthens Midwestern presence with Summit Wealth Strategies

Meanwhile, $34 billion independent First Manhattan welcomed New Jersey-based Roanoke Asset Management, an RIA firm with more than 40 years of history.

Osaic sees more staff cuts
Osaic sees more staff cuts

Most notably, two chief compliance officers have also recently left the firm.

Advisor moves: Cetera lures 12-person team from LPL, Raymond James reels in Commonwealth duo
Advisor moves: Cetera lures 12-person team from LPL, Raymond James reels in Commonwealth duo

The latest team to join Cetera, led by a 29-year veteran professional, arrives with roughly $380 million in AUA from OSJ Private Advisor Group.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.