The Fund seeks to capitalize on investment opportunities resulting from market dislocations in structured products including US MBS, ABS, CMBS, and European ABS.
Brookfield launched this strategy to take advantage of mispriced securities, a housing market recovery and pending regulatory changes that will create market opportunity. We expect a significant portion of return to be derived from purchasing deeply-discounted cash flows on securities we deem to be undervalued. The strategy will focus on sector-specific opportunities, security-specific opportunities and opportunities driven by unusual market technical factors. We are value investors focusing on bottom-up security selection. Our investment philosophy is predicated on acquiring assets in markets where we have a competitive advantage in understanding cash flows. An in-depth understanding of the potential range around fundamental factors combined with a detailed assessment of security-specific cash flows allows us to identify value and build attractive portfolios.
Our process focuses on identifying fundamental and technical factors responsible for performance and the potential range of outcomes. We utilize a proprietary analytic system, Profiler, which includes loan-level mortgage performance models, prepayment models, loss- adjusted yield profiles, cash flow sensitivity testing and interest shortfall projections.
Proprietary research and analysis provides an opportunity to generate excess returns, particularly in inefficient markets. Significant opportunities for outperformance exist when unique insights are applied within cash flow analysis.
The strategy benefits from synergies and the intellectual capital of Brookfield's core businesses in commercial and residential real estate and complex credit situations. We are active market participants, buying and selling securities. Market-pricing influences our view on value.