Core ROE is a good indication of proxy for dividend yield, which is fine, but we like to do everything kind
of a bottoms up, risk adjusted basis. And right now, we pivoted the credit on a relative value basis, you know, tied to a lot of these measures.
So at
the end of the day were producing just higher ROE more stable returns with less leverage. And in my comments about leverage in the system, I think its being downplayed a bit or ignored as the different headlines around the other parts of
the market tend to dominate. So thats kind of my comprehensive explanation to not just the one measure, but how all the measures interrelate and how we think about it.
Doug Harter
And then I guess, just in the context, I
mean, how do you think about the liquidity tradeoffs since agencies are clearly a more liquid asset if you wanted to move that around or kind of given your portfolio size, you still feel like you would have enough liquidity, you know, I guess, just
how does that factor into the equation?
Kevin Keyes
Yes, thats a good pickup. I mean, thats really how we drive our business and were starting with these the valuation measures are kind
of a product of how we manage our liquidity, so unencumbered assets and the liquidity of our liquidity as we like to talk about has really been never this high in the history of the company.
And that again is tied to some of the credit diversification, right, because obviously credit is less liquid. David can speak to the kind of the agency
portfolio management, but theres kind of a new way weve been describing how we manage this company and I really think of it as a merchant bank where were managing liquid more liquid interest rate strategies and albeit their
higher levered.
So in a world that leverages, I think, more risky, given where the curve is and other aspects of our business is less levered longer term
cash flows that are predominantly these credit businesses that were in. Thats the offset and the balance that we have. So I think but the liquidity measurement, you know, whats in our box and how we run the business on a
daily basis, thats really where it all starts from.
David Finkelstein
And Doug, this is David, Ill just add, obviously, liquidity is the primary consideration for us to the point about unencumbered assets which are over
$7 billion the majority of which are agency assets. Thats the first thing we look at every day. And also Ill point out that our financing options are of significant focus day in and day out. On the agency side we obviously have a
lot of diversity in our financing from traditional repo to a broker dealer to direct repo and we continue to build that out.
On the credit side, whether
its securitization or additional warehouse lines were constantly working on those as I mentioned in my comments. And so we feel like we