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Bob Carey
Chief Market Strategist
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  This Down And Out Asset Class Coming Back To Life
Posted Under: Conceptual Investing • Sectors
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View from the Observation Deck

  1. For those investors still apprehensive about taking on some additional risk in their investment portfolios, we offer today's perspective.
  2. Asset-backed securities were arguably at or near the epicenter of the financial crisis beginning in the latter half of 2007.
  3. Approximately 63% of the $2.16 trillion of asset-backed debt issued from 2004-2006 involved home equity loans, according to data from Thomson Reuters.
  4. The S&P Case-Shiller Composite-20 Home Price Index (Seasonally Adjusted/20 Cities) declined 51% from peak (4/30/06) to trough (1/31/12).
  5. As of August 2012, the index was down 44% from its peak. So prices are beginning to recover, albeit slowly.
  6. New issuance of asset-backed securities totaled $174.2 billion through the first 10 months of 2012, already surpassing the annual totals in each of the past four years.
  7. This go around, however, the demand is for repackaged auto loans. Auto loans account for 49% of asset-backed sales. Home equity loans just 2.0%.
  8. Investors should take some comfort in the fact that this controversial asset class is finally in recovery mode, in our opinion.
Posted on Tuesday, November 20, 2012 @ 4:15 PM • Post Link Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
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