Look for the U.S. structured finance team at Deutsche Asset Man-agement - a large investor in the ABS market - to grow its portfolio even more over the coming year.
The New York-based team, which completed its first CDO as collateral manager in November last year, is on the lookout for assets that would be appropriate for possible future deals, said Sean McCaffrey, the managing director who heads structured finance investing.
McCaffrey conceded that Deutsche is very choosy about the investments it makes - even more so lately because of tight spreads and increasing concerns about credit quality. But he said its interest in the market is as strong as ever.
"We're differentiated from a lot of firms which use structured finance simply as a place to get spread sector exposure in the swaps-based or Libor-based markets," McCaffrey said. "Sometimes you need one or two people to do that. Here, we have a huge commitment to structured finance, which we use as a primary alpha generation tool across our client mandates."
His 12-member team, which includes portfolio managers, traders and researchers, oversees more than $18 billion in term structured finance assets, with roughly 40% allocated to CMBS and the rest divvied up among ABS, prime RMBS and CDOs.
The team is part of a larger U.S. effort for Deutsche Asset Management that handles approximately $150 billion in investment-grade, fixed-income investments. Almost $100 billion is in term assets, with another $50 billion in money market securities, which includes asset-backed commercial paper.
Favoring CMBS
Deutsche's allocation to CMBS has been increasing for the past year - a trend that is expected to continue.
James Grady, the senior structured finance …
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