| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 4.59% | 1% | 1% |
Angel Oak Multi-Strategy Income Fund delivered 1.00% returns in Q1 2026, outperforming the Bloomberg U.S. Aggregate Bond Index by 105 basis points through higher income generation, shorter duration positioning, and lower corporate credit exposure. The fund maintains its largest allocation of 44% in non-agency RMBS, supported by record home equity levels, solid wage growth, and persistent housing supply-demand imbalances. Performance was driven by the securitized credit strategy while avoiding stretched valuations in investment-grade and high-yield corporate bonds. The Iran conflict beginning in late February created market volatility and energy price pressures, leading to dissipated rate cut expectations and brief pricing of potential rate hikes. The fund reduced non-agency RMBS exposure by 2% during the quarter, reallocating capital to underperforming securitized sectors. Looking ahead, the team expects potential mortgage basis outperformance in Q2 supported by limited supply and improving demand technicals, with fixed income positioned for stronger returns through 2026 as markets discount future conditions.
Angel Oak Multi-Strategy Income Fund maintains concentrated exposure to securitized credit, particularly non-agency residential mortgage-backed securities, while avoiding stretched corporate credit valuations in favor of sectors with stronger fundamentals and technical support.
The second quarter appears poised for potential mortgage basis outperformance, supported by limited supply and improving demand technicals. Fixed income may be positioned for meaningfully stronger returns through the remainder of 2026 as markets continue to discount future conditions.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Apr 18 2026 | 2026 Q1 | - | credit, duration, fixed income, Iran, Securitized | - | Angel Oak Multi-Strategy Income Fund outperformed by 105bps in Q1 2026 through concentrated securitized credit exposure, particularly 44% allocation to non-agency RMBS supported by strong housing fundamentals. Fund avoided stretched corporate credit valuations while navigating Iran conflict volatility. Management expects mortgage basis outperformance in Q2 with fixed income positioned for stronger returns through 2026. |
| Jan 27 2026 | 2025 Q4 | ANGIX, ANGLX | ABS, CLO, credit, duration, fixed income, Mortgage, RMBS, Securitized | - | Angel Oak Multi-Strategy Income Fund outperformed in Q4 2025 by 53 bps, driven by its overweight to high-quality securitized credit, particularly non-agency RMBS. Strong housing fundamentals and consumer resilience support the strategy, though tight credit spreads demand disciplined selection. Policy tailwinds and moderating inflation should support further economic growth and credit creation. |
| Oct 24 2025 | 2025 Q3 | - | credit, duration, Fed policy, fixed income, Mortgage, Securitized |
NQM CLO |
Angel Oak delivered 2.13% quarterly returns while maintaining defensive positioning in high-quality mortgage credit. The Fund's 45% allocation to non-agency RMBS benefits from strong housing fundamentals, while the manager remains cautious on broader economic deterioration despite Fed rate cuts supporting risk assets. |
| Jul 19 2025 | 2025 Q2 | - | credit, fixed income, Mortgage, rates, Securitized, tariffs | - | Angel Oak Multi-Strategy Income Fund maintains concentrated 47% allocation to non-agency RMBS supported by strong housing fundamentals and record home equity levels. Fund outperformed aggregate bond index but lagged peers due to defensive corporate credit positioning amid tariff uncertainty. Strategy favors securitized assets over corporate bonds while Fed remains on hold balancing inflation and employment concerns. |
| Mar 31 2025 | 2025 Q1 | - | credit, fixed income, inflation, Mortgage, rates, Securitized, tariffs | - | Angel Oak Multi-Strategy Income Fund delivered solid 2.33% Q1 returns despite tariff-driven uncertainty and inflation concerns. The Fund maintains defensive positioning in U.S. mortgage credit while tactically allocating across fixed-income opportunities. Management sees attractive risk-adjusted returns amid market volatility, rotating from junior to senior mortgage bonds and increasing corporate credit exposure. |
| Jan 21 2025 | 2024 Q4 | - | credit, duration, Fed policy, fixed income, Mortgage, rates | - | Angel Oak's mortgage-focused income fund outperformed by 241 bps in Q4 despite rising rates, benefiting from shorter duration and securitized credit exposure. The 50% non-agency RMBS allocation capitalizes on strong housing fundamentals while management actively trims stretched valuations. Positioned for MBS-corporate spread normalization amid Fed policy uncertainty and economic softening. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q1 |
MortgageFund maintains largest allocation of 44% in non-agency RMBS, supported by strong fundamentals including record home equity levels, solid wage growth, and persistent housing supply-demand imbalance. Prime jumbo securities and second-lien mortgage securities continue to perform well with attractive returns. |
RMBS Housing Credit Spreads Collateral |
IranIran conflict beginning February 28th represents key macroeconomic risk with potential for sustained energy price increases and persistent inflation. Duration and evolution of conflict will determine broader economic impact, though administration expected to seek exit ramp allowing volatility to ease in Q3. |
Geopolitical Energy Inflation Volatility Risk | |
RatesMarket expectations for rate cuts dissipated following conflict escalation and energy price surge, with brief pricing of potential rate hike. FOMC projections incorporate OBBBA stimulus effects with 2026 GDP growth revised up to 2.4% and core PCE inflation increased to 2.7%. |
Fed FOMC Monetary Policy Duration Yield | |
| 2025 Q4 |
AIEdgewood owns four AI infrastructure companies (NVIDIA, Broadcom, ASML, Synopsys) representing significant portfolio weight. The firm views AI as creating new product opportunities and efficiencies, with Draft One described as an AI killer app for police departments. AI Era Plan is the fastest booked Axon product to date. |
Infrastructure Software Data Centers Semiconductors Applications |
GrowthPortfolio companies delivered 27% average EPS growth in 2025 versus 7% stock performance, creating stored alpha. The firm maintains conviction in diversified portfolio fundamentals with strong earnings growth expected to continue in 2026. Portfolio is positioned across three growth buckets from 10-15% to 21%+ estimated long-term EPS growth. |
Earnings Fundamentals Valuation Alpha | |
SemiconductorsASML, NVIDIA, Broadcom, and Synopsys represent major portfolio positions. NVIDIA delivered 75% EPS growth, while ASML and Broadcom showed strong performance. Amphenol was added as a new position, benefiting from AI server demand requiring greater connector content versus traditional servers. |
Equipment Memory Connectivity Infrastructure | |
SoftwareSoftware segment represents 43% of revenue mix with 77% adjusted gross margins for companies like Axon. ServiceNow, Intuit, and other software names show strong recurring revenue models. AI is accelerating cloud demand and creating new monetization opportunities through tools like Draft One. |
SaaS Cloud Recurring Revenue Margins | |
| 2025 Q3 |
MortgageThe Fund maintains its largest allocation of approximately 45% in non-agency RMBS, supported by strong fundamentals including record levels of home equity, solid wage growth, and a persistent supply-demand imbalance in the housing market. Agency MBS represent roughly 19% of the Fund, with spreads tightening throughout the quarter from 119 bps to 102 bps. |
RMBS Agency MBS Housing Mortgage Credit Collateral Quality |
Credit StressThe manager notes emerging signs of economic deterioration including rising unemployment, increasing delinquencies, and weaker ISM PMI readings. Issuer tiering has re-emerged in parts of the securitized market, reintroducing yield premiums that had largely collapsed throughout 2024. |
Delinquencies Credit Quality Issuer Tiering Economic Deterioration Yield Premiums | |
RatesThe Federal Reserve cut rates by 25 basis points in September, viewed as the start of an easing cycle prompted by labor market weakness. Mixed signals between labor market data, consumer strength, and broader economic growth fueled debate over the future path of interest rates. |
Fed Cuts Rate Easing Monetary Policy Interest Rates Duration | |
| 2025 Q2 |
MortgageThe Fund maintains approximately 47% allocation in non-agency residential mortgage-backed securities, supported by strong fundamentals including record home equity levels, strong wage growth, and persistent supply-demand imbalance in the U.S. housing market. Agency MBS represents roughly 17% of the Fund with focus on higher-coupon bonds with less interest rate sensitivity. |
RMBS Agency MBS Prime Jumbo Non-QM Housing |
Trade PolicyMarkets faced significant volatility from reciprocal tariffs announced on April 2, which were paused on April 9 amid financial market turbulence. The scope, magnitude, and timing of potential tariff enforcement remain uncertain, with companies working to offset cost pressures and pass on price increases to preserve margins. |
Tariffs Trade Inflation Policy Uncertainty | |
RatesThe Federal Reserve remains in a holding pattern, balancing concerns over persistent inflationary risks tied to tariffs with a still-strong labor market and historically low unemployment at 4.1%. Markets anticipate potential for interest rate cuts later this year or in 2026. |
Fed Interest Rates Monetary Policy Inflation Employment | |
| 2025 Q1 |
MortgageNon-agency RMBS remains the largest allocation at approximately 50% of the Fund, producing a 2.6% total return in Q1. The Fund continues to favor U.S. residential mortgage credit given strong fundamentals including record home equity, robust wages, and systemic supply-demand imbalance in housing. The allocation is positioned defensively with rotation from junior to senior bonds. |
RMBS Housing Credit Residential Securitized |
Trade PolicyTariff announcements raised uncertainty and diminished economic growth outlook, leading to asset valuation reversals. Economists see higher recession probability due to tariffs' broad-based nature and expected impact on economic activity. Consumers are already shifting spending patterns ahead of tariff implementations, with price increases placing largest burden on lower-income households. |
Tariffs Trade Economic Policy Uncertainty | |
InflationLong-term inflation expectations moved sharply higher with University of Michigan 5-to-10-year expectations jumping from 3% to 4.1% by March. Fed updated expectations for Core PCE from 2.5% to 2.8% for 2025, with concerns about tariffs' potential impact on inflation being transitory or persistent. |
Expectations PCE Fed Monetary Policy | |
RatesTreasury rates rallied across the curve with the 10-year falling 36 bps to 4.21%. High-quality and interest-rate-sensitive sectors performed best as rates declined. The Fund benefited from lower rates despite having shorter duration than benchmark, with materially lower interest rates contributing to solid absolute returns. |
Treasury Duration Yield Curve Sensitivity | |
| 2024 Q4 |
MortgageThe fund maintains approximately 50% allocation to non-agency RMBS, with prime jumbo as the largest subsector at 30%. The manager continues to favor U.S. residential mortgage credit due to strong fundamentals including record home equity, robust wages, and systemic supply-demand imbalance in housing. They are reducing allocation by selling riskiest bonds where valuations looked stretched. |
RMBS Prime Jumbo Non-QM Legacy Housing |
RatesInterest rates on 2-30 year maturities moved up 60-80+ basis points during the quarter. Rate cut expectations for 2025 declined dramatically from 200-250 bps to 25-50 bps. The fund benefited from shorter duration positioning at 4.1 years versus benchmark duration of 6.1 years, helping outperform during rising rate environment. |
Duration Fed Cuts Treasury SOFR Yield Curve | |
InflationCore PCE has settled into mid-to-high 2% range since midsummer, with progress slowing from earlier highs. The Fed continues to target 2% inflation and views risks to both inflation and employment as balanced. Uncertainty exists regarding potential inflationary implications from new administration policies. |
PCE Fed Target Policy Risk Wage Growth |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Oct 24, 2025 | Fund Letters | Sreeni Prabhu | NQM | Non-Qualified Mortgage Bonds | Materials | Securitized Products | Bull | - | Home equity, Housing supply, Non-qm, Rmbs, Securitized credit, Yield premium | Login |
| Oct 24, 2025 | Fund Letters | Sreeni Prabhu | CLO | Collateralized Loan Obligations | Other | Structured Credit | Bull | - | Carry, Clo, Mezzanine tranches, Spreads, Structured credit, yield | Login |
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