Inflation & fixed income: Regan Capital’s strategy

Core Insights - Rising interest rates, inflation, and global volatility are significantly influencing opportunities in the fixed income market, particularly in residential mortgage-backed securities [1] Fixed Income Market Dynamics - The traditional fixed income universe carries substantial interest-rate risk due to longer duration, with the US Aggregate fixed income index having a duration of around six years, meaning a one percentage point increase in interest rates can lead to a 6% loss [2] - Current mortgage rates in the US have recently reached the 5% level, which has begun to increase refinancing activity, benefiting investors holding discounted mortgage bonds as faster prepayments allow quicker capital recovery [2] Investment Strategy - Regan Capital is focusing on short-duration and floating-rate mortgage securities, which are expected to perform better in environments with elevated interest rates [3] - The importance of government-guaranteed agency securities is emphasized, as they have historically shown lower volatility during market stress [3] Market Performance During Uncertainty - US Treasuries and government-backed securities tend to outperform more credit-sensitive assets like corporate or municipal bonds during periods of uncertainty, as seen during events like the COVID-19 market shock and current geopolitical tensions [4] New Fund Launch - Regan Capital and HANetf launched the Regan Total Return Income Fund UCITS ETF (ticker: RMBS) in July 2025 [4]