Thrivent Financial for Lutherans is looking to put new cash to work and buy short, liquid asset-backed bonds, as part of a broader strategy to put on a duration barbell and protect itself in an uncertain interest-rate environment. Scott Lalim, portfolio manager of a $1.5 billion portfolio in Minneapolis, says he is looking to buy short ABS across sectors, including home equity and credit card, although he would prefer to add auto loan paper from benchmark issuers such as Ford Motor Credit because it offers some additional yield versus the other liquid sectors. By adding shorter bonds, Lalim says the portfolio can hedge itself against a rate movement. "I'm not sure where rates are going, but if they go up, we have the ability to sell the longer stuff," he says.
Thrivent Financial uses a customized index for its ABS portfolio that Lalim declines to reveal. Relative to the index, the firm is currently overweight autos, home equities and manufactured housing and underweight credit cards. It will also look to move up in credit quality by buying Ford paper, which also happens to be one of the most liquid of auto bonds.
