The Edge that Lets Barings Play Offence on Yield when Everyone Else Is Running for the Hills

Why It Matters

Barings’ data‑driven RMBS strategy offers income investors a way to capture rising yields while mitigating the legacy risks that deter most market participants, making it a compelling alternative to low‑return cash holdings in today’s rate‑sensitive landscape.

Key Takeaways

• Australian RMBS market totals $2 trillion, yet remains under‑invested.
• Floating‑rate RMBS yields rise directly with RBI’s rate hikes.
• Barings leverages millions of loan‑level data points for offensive positioning.
• Illiquid RMBS segments offer higher risk‑adjusted returns for specialists.
• Macro stress in China or first‑payment defaults could trigger pressure.

Summary

In this Livewire Markets Income Series episode, Anna Dadich interviews Ashley Burtonshaw, senior portfolio manager at Barings Asset‑Based Finance Australia, about the country’s massive yet under‑appreciated residential mortgage‑backed securities (RMBS) market, which exceeds $2 trillion in notional value. Burtonshaw explains why many income investors shy away – the market’s perceived complexity, inconsistent reporting, and lingering reliance on rating agencies after the 2008 crisis.

Barings’ strategy hinges on three pillars: floating‑rate exposure that automatically lifts yields as the Reserve Bank of Australia hikes rates, a pristine default record across three decades, and an extensive data‑analytics engine that monitors millions of loan‑level metrics each month. This granular insight lets the team shift between offensive and defensive postures, targeting illiquid RMBS slices that command premium returns while maintaining liquidity for the fund.

Key soundbites underscore the philosophy: “Data breeds certainty,” and “We play offense when others run for the hills.” Burtonshaw stresses that the bonds are “over‑engineered and very difficult to break,” and that the illiquid market segment offers a superior risk‑adjusted payoff for specialists. He also flags macro vulnerabilities – a sharp slowdown in China or a rise in first‑payment defaults could pressure the portfolio.

For investors moving out of cash or term deposits, Barings’ Bliss Fund promises higher, floating yields with a 15‑year track record, balancing return against risk without the timing challenges of short‑term deposits. The approach illustrates how sophisticated data and a focus on less‑crowded market pockets can unlock income opportunities in a high‑for‑longer rate environment.

Original Description

Why are income investors ignoring a $2 trillion market with a 30-year track record of zero defaults?

In this episode of Livewire’s 2026 Income Series, Anna Dadic sits down with Ashley Burtenshaw, Managing Director and Senior Portfolio Manager at Barings Asset-Based Finance Australia.

With the RBA pushing rates higher, the shadow of the 2008 Global Financial Crisis still causes many investors to run for cover. But Burtenshaw argues that the Australian residential mortgage-backed securities (RMBS) market is built to bend, not break. In this interview, he explains how Barings uses millions of data points to play offence while others play defence, why mortgage stress headlines are overstated, and why floating-rate bonds are leaving term deposits in the dust.

Key Topics Covered:

- The "Big Short" Hangover: Why a $2 trillion market is still widely misunderstood.

- Floating-Rate vs. Term Deposits: Why locking into a TD means leaving money on the table in a rising rate environment.

- Is Mortgage Stress Real? How Barings tracks individual loans to separate media headlines from data-driven reality.

- The Red Flags: The macro risks Burtenshaw is actually watching (including China and early payment defaults).

- Where Capital is Going: Harvesting higher risk-adjusted returns in the illiquid segments of the RMBS market.

Read the full wire on Livewire Markets here: https://bit.ly/4vFAKS3

This interview was filmed 13th May, 2026.

Timestamps

0:03 - Introduction: The Overlooked $2T Market

0:27 - The Shadow of the GFC & Australian RMBS

2:15 - Why Rising Rates Benefit Floating-Rate Bonds

3:20 - Is Mortgage Stress As Bad As It Looks?

3:56 - Playing Offence When Others Play Defence

5:27 - Structural Protections: Built to Bend, Not Break

6:45 - Moving Out of Cash & TDs (Why the Bank Always Wins)

7:59 - The Macro Risks: China & First-Payment Defaults

9:19 - Where Barings is Finding Yield Right Now