Invesco Mortgage Capital Inc (NYSE:IVR), like Annaly Capital Management, Inc. (NYSE:NLY), has the advantage of being a hybrid REIT, meaning it can invest in securities not issued by either Fannie Mae or Freddie Mac. On the companies’ second-quarter earnings call, CEO Richard King highlighted increased interest rate hedging, diversifying into commercial securities with attractive yields, and improving the companies funding strategies in anticipation of further volatility.
A common theme
The vast majority of investors and market observers recognize that interest rates will rise from today’s historically low levels. The uncertainty is when and how rates will move from low to high.
Unfortunately for my bank account, I don’t have a crystal ball to see the future in the markets. But I do recognize the uncertainty today, and to me, that indicates volatility. When faced with these challenging conditions, I want my investing dollars in companies that are fundamentally sound and capable of weathering the storm.
The article Why I’m Preparing for Volatility in the Mortgage Sector originally appeared on Fool.com.
Fool contributor Jay Jenkins has no position in any stocks mentioned. The Motley Fool recommends Wells Fargo. The Motley Fool owns shares of Wells Fargo.
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