| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 4.6% | 1.6% | 7.7% |
| 2025 | 2024 |
|---|---|
| 7.7% | 7.5% |
The Angel Oak Multi-Strategy Income Fund returned 1.63% in Q4 2025, outperforming its benchmark by 53 basis points driven by higher income generation and modest spread tightening in securitized credit. The Fund maintains its core thesis of overweighting high-quality securitized credit, with approximately 45% allocated to non-agency RMBS supported by record home equity levels, solid wage growth, and persistent housing supply-demand imbalances. The consumer and broader economy demonstrated resilience in the quarter, with unemployment at 4.4% and companies maintaining near-record margins despite tariff pressures. Credit markets advanced broadly, though spreads remain near historical tights, requiring disciplined security selection. The Fund benefits from a steepening yield curve and maintains defensive positioning in CLOs while reducing Agency MBS exposure following spread tightening. Looking ahead, the outlook remains anchored in consumer and corporate resilience, with expected policy tailwinds and moderating inflation creating room for further rate cuts to support credit creation and economic growth.
The Fund maintains an overweight to high-quality securitized credit, particularly non-agency RMBS, capitalizing on strong housing market fundamentals and attractive risk-adjusted yields while navigating tight credit spreads through disciplined security selection.
The outlook is anchored in resilience across both consumers and corporates, with consumers benefiting from a strong labor market and corporates sustaining margins through cost management. Growth should receive additional lift in 2026 from policy changes, while moderating inflation should create room for further rate cuts supporting economic growth.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 27 2026 | 2025 Q4 | - | ABS, CLO, credit, duration, fixed income, Mortgage, RMBS, Securitized | - | The Fund maintains its largest allocation of approximately 45% in non-agency residential mortgage-backed securities (RMBS), supported by strong fundamentals including record levels of home equity, solid wage growth, and persistent supply-demand imbalance in the housing market. The sector returned 2.1% during the quarter, contributing 96 bps to overall performance. Resilience replaced uncertainty in the fourth quarter as the consumer, broader economy, and risk assets delivered solid results. The consumer remains a pillar of strength with unemployment at 4.4% and positive real wage gains continuing to support spending. Corporate earnings remain solid, enabling companies to pass through tariff and supply-chain cost increases while maintaining near-record margins. Credit markets advanced broadly with the Bloomberg U.S. Corporate High Yield Bond Index up 1.31% and Investment Grade Index up 0.84%. Securitized credit spreads continued to tighten throughout the fourth quarter despite record issuance across most securitized products. Credit spreads remain near the tightest levels in their historical range, leaving little margin for error. Overall risk appetite remains strong as market participants anticipate fiscal and monetary policy, along with regulatory tailwinds, to be supportive in the coming year. The K-shaped economy is evident in markets, with higher-quality issuers and collateral attracting strong demand across corporate and securitized markets. |
| Oct 24 2025 | 2025 Q3 | - | ABS, CLO, credit, interest rates, RMBS |
NQM CLO |
Credit and securitized products rallied on Fed rate cuts and improving confidence that trade tensions would not escalate. The fund emphasizes high-quality, shorter duration bonds across RMBS, ABS, and CLOs, benefiting from resilient fundamentals and tight spreads. Managers maintain a cautious stance amid mixed economic data and inflation persistence. |
| Jul 19 2025 | 2025 Q2 | - | ABS, CLO, credit, income, RMBS | - | The commentary focuses on resilient credit markets supported by moderating inflation, strong labor conditions, and fiscal stimulus expectations. The fund emphasizes non-agency RMBS, ABS, and CLOs as core income drivers, supported by strong housing fundamentals and disciplined duration management. Credit volatility is framed as cyclical and exploitable through active sector allocation. |
| Mar 31 2025 | 2025 Q1 | - | - | - | |
| Jan 21 2025 | 2024 Q4 | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
CreditFund focuses on elevated carry in high yield credit markets with spreads remaining range bound below 300 basis points. Manager believes high yield credit is fundamentally strong but valuations are tight, particularly in higher quality BBs. Strategy emphasizes sourcing positions with higher income levels given limited price appreciation opportunities. |
High Yield Credit Spreads Carry Investment Grade |
MortgageFalling interest rates and federal support for housing should drive a continued rebound in mortgage origination volumes, which should benefit mortgage originators and credit bureaus. FICO launched its new Direct Licensing Program for mortgage lending, which provides greater flexibility to monetize its intellectual property. |
Mortgage Origination Housing Credit Scoring Lending Real Estate | |
Resilience2025 tested the fund's thesis severely with a bankruptcy, major customer losses, and cyber-attacks, yet delivered 17.45% net returns. The manager emphasizes that edge comes from exploiting inefficiency rather than avoiding adversity, demonstrating portfolio resilience through active management. |
Adversity Active Management Drawdowns Volatility | |
Risk AppetiteManager emphasizes disciplined risk management through cycle awareness rather than market timing. Fund maintains cash cushion during high-risk periods and deploys capital countercyclically. Approach focuses on behavioral edge by having cash available when fear creates best entry points and avoiding leverage that leads to forced selling. |
Leverage Cash Volatility Positioning Discipline | |
| 2025 Q3 |
Fixed Income |
|
| 2025 Q2 |
CreditFund focuses on elevated carry in high yield credit markets with spreads remaining range bound below 300 basis points. Manager believes high yield credit is fundamentally strong but valuations are tight, particularly in higher quality BBs. Strategy emphasizes sourcing positions with higher income levels given limited price appreciation opportunities. |
High Yield Credit Spreads Carry Investment Grade |
| 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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