- Current economic trends, U.S. commercial real estate fundamentals, and...
High Quality Yield is a Commercial-Mortgage Backed Securities (CMBS) strategy that focuses on generating a significant amount of current income, over the long-term, primarily through bottom-up security selection.
Why choose this investment strategy?
We’ve been analyzing and purchasing CMBS since their inception in the late 1990s. Our High Quality Yield strategy offers several benefits:
• Access to cross-asset insights of Principal Global Investors: We believe a deep understanding of real estate—especially granular loan-level analysis—is critical to CMBS success. That granular analysis is an essential part of our investment process, along with the “on-the-ground” due diligence insights we get from our broader Principal Real Estate Investors team.
We also look to the insights of Principal Global Fixed Income to gain a better understanding of underlying securities, due to CMBS spanning the real estate and fixed income asset classes.
• An experienced investment team: As one of the early investors in the market, we’ve developed valuable and wide-ranging relationships with market participants. Our CMBS team of investment professionals brings over 133 combined years of commercial real estate and/or CMBS experience to your portfolio.
• Proprietary research and modeling: Our investment process combines loan-level analysis with quantitative modeling. We conduct independent research on over 600 CMBS bonds per year. We’ve also developed a proprietary, dynamic CMBS default model that allows us to analyze a full distribution of potential bond returns, based on 2,000 different economic scenarios, including tail events.
Where High Quality Yield invests
We select securities that offer attractive risk-adjusted returns, based on our projection of fair value relative to current market price. Our dynamic investment process allows us to internally rate credit risk, identify relative value from a risk-adjusted perspective, assess cash-flow volatility, and actively manage risk through market cycles.
We also continuously monitor macroeconomic factors and technical influences to help provide you with the best possible return.