The PIA MBS Bond Fund’s investment objective is to seek to provide a total rate of return that exceeds Bloomberg Barclays U.S. MBS Fixed Rate Index (“the MBS index”).
Style Benchmark: Bloomberg Barclays MBS Fixed Rate Index
Fund Assets: $69 million
Fund Inception: 02.28.06
Expense Ratio: 0.34%
*Net Expense Ratio: 0.23%
Mortgage-backed securities (MBS) have often been difficult to access in traditional separately managed accounts due to liquidity restraints and transaction costs. The PIA MBS Fund is a tool available to clients of all sizes, which can provide diversified exposure to this sector. The Fund relies on PIA’s MBS research and quantitative techniques to attempt to provide value-added versus the Bloomberg Barclays Fixed Rate MBS Index.
The use of the MACS complements the firm’s individual security selection to provide a portfolio that is more reflective of our institutional fixed income management approach.
The weighted average duration of the PIA MBS Bond Fund will generally range from plus or minus one year of the MBS index. We employ option adjusted spread (OAS) analysis to help determine the value of various coupons within the various maturity structures compared to the MBS Index. Prepayment of principal is also analyzed on an historical and forecasted basis to help determine the average life of the MBS. The use of TBA (to be arranged) MBS securities are also analyzed to add value as an alternative to taking delivery of specified MBS pools.
The Fund primarily purchases mortgage-backed securities, including commercial mortgage backed securities. After having determined the types of MBS in which to invest and the overall target duration, we look for the most attractive yields and OAS in the various asset classes.
*The Adviser has voluntarily agreed to pay for all operating expenses (excluding acquired fund fees and expenses) incurred by the MBS Bond Fund through at least March 29, 2020 to the extent necessary to limit Net Annual Fund Operating Expenses for the Fund to 0.23% of the Fund’s average daily net assets. The Net Expense is what the investor has paid.
Investments in debt securities typically decrease in value when interest rates rise. This risk is usually greater for longer-term debt securities. Investments in Asset Backed and Mortgage Backed Securities include additional risks that investors should be aware of such as credit risk, prepayment risk, possible illiquidity and default, as well as increased susceptibility to adverse economic developments. The fund may also use options, futures contracts, and swaps, which have the risks of unlimited losses of the underlying holdings due to unanticipated market movements and failure to correctly predict the direction of securities prices, interest rates and currency exchange rates. Derivatives involve risks different from, and in certain cases, greater than the risks presented by more traditional investments. These risks are fully disclosed in the Prospectus.
Bloomberg Barclays MBS Fixed Rate Index: Tracks fixed-rate agency mortgage backed pass-through securities guaranteed by Ginnie Mae (GNMA), Fannie Mae (FNMA), and Freddie Mac (FHLMC). The index is constructed by grouping individual TBA-deliverable MBS pools into aggregates or generics based on program, coupon and vintage. You cannot invest directly in an index.
Duration is a commonly used measure of the potential volatility of the price of a debt security, or the aggregate market value of a portfolio of debt securities, prior to maturity. Securities with a longer duration generally have more volatile prices than securities of comparable quality with a shorter duration.
Diversification does not guarantee a profit or protect from loss in a declining market.