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HIMCO Plans To Shift GNMAs

Hartford Investment Management will reduce its exposure to 30-year mortgage-backed securities.

Chris Hanlon

Hartford Investment Management will reduce its exposure to 30-year mortgage-backed securities. Chris Hanlon, manager of a $5 billion MBS and collateralized mortgage obligation portfolio in Hartford, said he plans to sell Ginnie Mae 30-years and use the proceeds to buy 15-year GNMAs, to bring the fund's 30-year exposure to neutral and increase its 15-year allocation from underweight to neutral. He declined to quantify how much he will buy or sell or how it will affect the fund's duration but said he will definitely make the switch to keep the fund's duration in line with that of its index's because he does not want to bet on duration. Overall, Hanlon said he believes MBS have cheapened lately in relation to other asset classes due to prepayment and supply fears, as well as higher implied volatilities. The portfolio is currently overweight in GNMA 30s and underweight in GNMA 15s; it uses a composite benchmark based on the Lehman Brothers Mortgage Index. The current allocations are underweight by 10% to Freddie Mac and Fannie Mae and 5-10% to GNMA.

The fund has about 2-3% in whole loans and another 2-3% in collateralized mortgage obligations.

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