Agency mortgage derivatives are a unique, highly liquid alternative fixed income class with little correlation to other asset classes. In a properly hedged portfolio, they have historically been able to deliver attractive risk-adjusted returns with minimal credit risk.

The asset class’s main risk comes from US homeowners prepaying their mortgages in surprising numbers. With mortgage rates at a 20-year high and home sales sluggish, that seems unlikely—yet spreads in the sector remain wide, making it highly opportune timing for investments in the asset class.

Voya’s mortgage derivatives team is one of the oldest and largest investors in the sector, managing approximately $4.6 billion (as of 9/30/2023) across several portfolios.

Hear from Jake Lowery, Senior Portfolio Manager, Mortgage Derivatives, and Alexandra Volpone, Vice President, Alternative Product Solutions, for a primer on the asset class.