Big refinancing wave ahead: fixed-income fund manager

The Fed's decision last week to not raise interest rates is raising global concerns about economic growth. “The Fed missed a real opportunity to infuse some confidence in the markets right now and instead, we’re going to be circling the airport for next couple of months and that’s unfortunate,” said Brad Friedlander, managing partner of Angel Oak Capital Advisors.

The circumstances that held the Fed back from raising interest rates in its September meeting will not change in the immediate future, according to Friedlander. “China is still softening and will be softening but at the same time, the impact to the United States from an export standpoint is not going to be that dramatic,” he said.

The investment management firm focuses on fixed-income with its Angel Oak Multi-Strategy Income Fund (ANGLX) and Angel Oak Flexible Income Fund (ANFLX). As a bond investor, Friedlander is advising floating rate assets for his clients. “That’s where I think the opportunities are, and to take deliberate credit risk, that’s the key,” he said.

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Housing is another bright spot Friedlander pointed to, “we’re really seeing pockets of the U.S. where job growth has been strong and you’re seeing parts of America that are still underbuilt.” Some other catalysts he suggests include first time homebuyers, access to credit and a revitalized securitization market.

When rates do eventually rise, “surprisingly [there's] going to have a big refinance wave,” said Friedlander. Aside from most mortgages in America being adjustable rate loans, he claims access to credit will bolster the mortgage industry. “That’s been bottlenecking most of the housing and credit markets over the last several years,” he said.

 

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