Thrivent Financial for Lutherans is planning to allocate roughly $250 million to illiquid structured finance assets. Scott Lalim, portfolio manager for asset-backed and commercial mortgage-backed investments in Minneapolis, said its $1.5 billion structured finance portfolio is split into two parts. About $1 billion is in liquid securities such as home equities, autos and credit cards. The other $500 million is held in less-liquid securitizations such as manufactured housing, catastrophe bonds and collateralized debt obligations.
Lalim said he plans to gradually take on more credit risk in a bid to capture yield and expects to grow the illiquid portfolio to the point where it amounts to roughly half of structured finance investments. He was recently considering investing in the Bluegreen Corp. timeshare securitization.
"We probably have enough liquidity, so we can add some more illiquidity and credit risk," Lalim explained. He stressed any increase will take place gradually over the next year as it takes longer to evaluate highly structured, subordinate assets. "We will keep the liquid portfolio at that amount and put some new cash into some of the story bonds," he said, adding, "we're not getting paid enough for the liquid stuff right now."
The separate illiquid portfolio was set up earlier this year. Thrivent had been considering creating a distinct portfolio for private and less-liquid structured finance assets at the end of last year (BW, 11/10).
