The opportunity as we go through 2023, we think, is all about housing and the uncertainty as it unfolds.

And investors are clearly being compensated quite well to participate in that space.

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2022 was a very challenging year as interest rates backed up in such a meaningful and aggressive manner.

It went from an environment where mortgage rates were right around 3% to start the year to wrapping up the year, you know, right around 7 to 7 and a half percent.

In terms of the opportunities that we think about where we go from here, it's really the ability to kind of bifurcate or delineate what borrowers are at risk versus which borrowers are potentially not at risk and tend to be a much more isolated or insulated from some of that behavior.

So, focusing on assets that you have a lot of protection either in terms of the underlying loan profiles, the capital structure -- what kind of protections do you have as a bond investor through things like credit enhancement and various other attributes?

And then most importantly, how well are you being compensated to take on that risk?

While there are risks and still uncertainty in the markets, we think the most attractive risk-adjusted opportunities are by focusing on higher quality investments within the structured product market.

You know, things like agency mortgages or higher rated sectors of the capital structure.

High-quality assets are at the widest spreads that, broadly, they have ever been at.

And as you look at credit-based sectors of the market, you know, much of it foretells a lot of concerning fundamental behavior.

And so investors are being compensated for, you know, what can potentially be a mild to modestly rough recession.

And that's not necessarily the case in many other sectors of the market.

So from our perspective, you know, investors are being well compensated for whatever the potential investment outcomes or economic outcomes are in 2023.

There are risks associated with fixed-income investments, including credit risk, interest rate risk, and prepayment and extension risk. In general, bond prices rise when interest rates fall and vice versa. This effect is usually more pronounced for longer term securities. The views expressed are as of December 2022, may change as market or other conditions change and may differ from views expressed by other Columbia Management Investment Advisers, LLC (CMIA) associates or affiliates. Actual investments or investment decisions made by CMIA and its affiliates, whether for its own account or on behalf of clients, may not necessarily reflect the views expressed. This information is not intended to provide investment advice and does not take into consideration individual investor circumstances. Investment decisions should always be made based on an investor's specific financial needs, objectives, goals, time horizon and risk tolerance. Asset classes described may not be appropriate for all investors. Past performance does not guarantee future results, and no forecast should be considered a guarantee either. Since economic and market conditions change frequently, there can be no assurance that the trends described here will continue or that any forecasts are accurate. Securities products offered through Columbia Management Investment Distributors, Inc., member FINRA. Advisory services provided by Columbia Management Investment Advisers, LLC. Columbia Threadneedle Investments (Columbia Threadneedle) is the global brand name of the Columbia and Threadneedle group of companies. © 2023 Columbia Management Investment Advisers, LLC. All rights reserved. 5393080