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Navigating Market Volatility with Diversification and RMBS

In recent weeks, the financial markets have experienced a period of uncertainty, with interest rates moderating and stock markets remaining sluggish. Diversification involves spreading investments across different asset classes. This approach helps mitigate the impact of downturns in any single asset class, thereby reducing overall portfolio risk.

Residential MBS (RMBS) have low correlation to stocks and provide a consistent stream of income in the form of interest payments, catering to investors seeking regular cash flow. Despite recent yield compression, RMBS still offer comparatively attractive yields.

Also, RMBS in Hong Kong are considered highly safe as RMBS are backed by mortgages secured by residential properties in Hong Kong, which are known for their stability and low default rates.

Moreover, RMBS in Hong Kong typically comprise a diverse pool of mortgages, reducing the impact of idiosyncratic risks associated with individual properties.

As market volatility persists, diversification remains an essential tool for mitigating risk and enhancing portfolio stability.


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