As institutional investors pressure fund managers for higher-yielding strategies in the current low-yield environment, bond funds have turned to asset-backed securities to stoke returns. Asset-backed securities are bundles of loans that have been packaged together to be sold on and can include loans from credit cards, business loans, car finance, residential mortgages and commercial mortgages.

In recent weeks, the European Central Bank and the Bank of England have made a series of announcements about the best approach to stimulate the asset-backed securities market in order to stimulate loans to smaller businesses.