About MBS/ABS
Asset-Backed Versus Other Fixed-Income Securities
Amortizing ABS, like mortgage-backed securities, are generally sold and traded according to their “average life” rather than their stated maturity dates, as with corporate and government bonds. Average life, as described under “Interest Rates and Yields on ABS” (page 8), is the average length of time that each principal dollar in a pool is expected to be outstanding.
Although ABS are less familiar to some investors, the cash-flow characteristics of these securities often mirror those of MBS—which is not surprising: Mortgages were the first assets to be securitized, and they have become very familiar to investors. Less commonly, ABS may have cash flows that resemble those of corporate bonds.
All information and opinions contained in this publication were produced by the Securities Industry and Financial Markets Association from our membership and other sources believed by the Association to be accurate and reliable. By providing this general information, the Securities Industry and Financial Markets Association makes neither a recommendation as to the appropriateness of investing in fixed-income securities nor is it providing any specific investment advice for any particular investor. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and sources may be required to make informed investment decisions.