Esoteric ABS

An ABS subset backed by less traditional collateral that aims for higher yields than comparably rated corporate debt instruments and other structured securities. The asset class also provides strong capital preservation through structural protections and offers additional portfolio diversification.

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Process

As with traditional ABS, Conning's esoteric ABS invests primarily in a broad range of high-quality securities with competitive yields relative to other comparably rated debt instruments that are consistent with a client's unique constraints. Esoteric securities tend to issue less frequently and in smaller sizes.
Conning categorizes esoteric collateral in three groups:
Consumer
(e.g., loans)
Commercial
(e.g., equipment leases)
Digital Infrastructure
(e.g., data centers)
Fundamental and quantitative analysis of credit and prepayment risk identifies relative value; we select securities meeting strict credit structure and risk standards.
 
1

Esoteric ABS Universe

Conning's esoteric ABS invests in a broad range of high-quality securities with competitive yields relative to other comparably rated debt instruments
2

Quantitative Screening

Apply quantitative criteria to screen for securities consistent with a client's unique constraints
3

Quantitative Review

Conduct a qualitative review of selected securities, focusing on credit and prepayment risk
4

Security Selection

Select securities meeting strict credit, structure, and risk standards

Expert

Mike Nowakowski

Mike Nowakowski is a Managing Director and Head of Structured Products, overseeing trading of ABS securities. Prior to joining Conning, he was a portfolio manager focused on Agency MBS and ABS at GE Asset Management, State Street Global Advisors, and People’s United Bank. Previously, Mr. Nowakowski was a portfolio manager focused on Money Markets. Mr. Nowakowski earned a bachelor’s degree in Business from Plymouth State University where he graduated Magna Cum Laude.

Mike Nowakowski is a Managing Director and Head of Structured Products, overseeing trading of ABS securities. Prior to joining Conning, he was a portfolio manager focused on Agency MBS and ABS at GE Asset Management, State Street Global Advisors, and People’s United Bank. Previously, Mr. Nowakowski was a portfolio manager focused on Money Markets. Mr. Nowakowski earned a bachelor’s degree in Business from Plymou Read More...

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Risk Considerations

 
Investment Risk - The potentially complex structure of the security may produce unexpected investment results not based on default or recovery statistics.
 
Valuation Risk - Valuations of structured credit products are provided by third parties, based on models, indicative quotes, and estimates of value, in addition to historical trades. There is inherent difficulty in valuing these asets, and there can be no assurances the assets can be disposed of or liquidated at the valuations established, or that published returns will be achieved.
 
Underlying Asset Credit Risk - During periods of economic uncertainty, and recession, the incidence of modifications and restructurings of investments may increase, resulting in impairments to the underlying asset value.
 
Economic Risk - Changing economic, political, regulatory or market conditions, interest rates, general levels of economic activity, the prices of securities and debt instruments and participation by other investors in financial markets may affect the value of the structured security and all other asset classes.