A secured finance primer: Capturing value by understanding and exploiting complexity

A secured finance primer: Capturing value by understanding and exploiting complexity | Insight Investment

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25 September 2025 Fixed income

“Secured finance, which includes asset-backed securities, or ABS, may be a greatly underappreciated asset class, and could represent a rare example of having the potential to provide higher returns but with lower risk than other credit assets.”

Andy Burgess,
Deputy Head of Fixed Income Investment Specialists

Secured finance and ABS instruments are structured into different classes of bonds with different credit ratings. Senior bonds carry less risk and typically offer lower returns compared to lower rated bonds which absorb potential losses first, so generally provide a higher return. However, their complexity means that frequently, even the best rated secured bonds have higher returns than comparable corporate bonds with lower credit ratings.

The secured finance waterfall

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