By ROBERT HARLEY 01/03/2006
An AIM and Guernsey listed company investing in the equity tranche of European Residential Mortgage Backed Securities (RMBS). This asset class is expected to provide returns mainly in the form of income, whilst at the same time attempting to maintain capital values. Once fully invested the yield is estimated to be about 10% prior to the application of gearing. Gearing may subsequently be applied upto 70% loan to value. Investors will be assuming a euro currency risk.
Ocean Capital, are one of the few management teams that focus exclusively on investing in this illiquid and under researched market. This product is designed to provide a more liquid means of exposure to the asset class, whilst at the same time taking advantage of current market inefficiencies to optimise the risk / return ratio. The management team expect the market for RMBS equity tranches to expand rapidly in the near future as european banks seek to restructure their balance sheet following new financial regulation introduced by the BASEL II accord. Whilst we have awarded this company a three star rating, prospective investors should be aware that on account of the subordinated nature of this investment within its asset pool and the potential to apply leverage at the fund level, this structure must be considered as a high risk investment proposition where investors capital could be at a substantial risk.