Our sole focus is on managing a leveraged portfolio of short-duration* agency-guaranteed (i.e. Fannie Mae, Freddie Mac and Ginnie Mae) residential ARM securities that is appropriately hedged and can earn attractive risk-adjusted returns over the long term, with little, if any, credit risk.
We finance our agency-guaranteed residential ARM securities primarily with 30- to 90-day secured borrowings augmented primarily with low-cost interest rate swap agreements for hedging purposes and longer-dated secured borrowings when available at attractive levels.
* Duration is a common measure of market price sensitivity to interest rate movements. A shorter duration generally indicates less interest rate risk.