Annaly Capital Management, Inc. (“Annaly”) is a leading diversified capital manager that invests in and finances residential and commercial assets. Since our founding in 1996 and subsequent initial public offering (“IPO”) in 1997, we have generated net income for distribution to our shareholders and have preserved capital through the prudent selection of investments and continued management of our portfolio. With approximately $89.5 billion in assets(1), our portfolio includes securities, loans and equity in both the residential and commercial markets. Annaly has elected to be taxed as a real estate investment trust, or REIT, for federal income tax purposes.
Annaly is a vehicle for long-term asset ownership. We use our capital, coupled with various structured financing products to invest in assets in both commercial and residential markets, earning the spread between the yield on our investments and the cost of our borrowings and hedging activities. To maintain our desired capital profile, we utilize a mix of debt and equity funding based on our investment profile and market view. Our range of financing alternatives includes traditional repo, warehouse lines, FHLB and financing through our own broker dealer.
Diversification is a pillar of the Annaly strategy. Since 2010 we have diversified our business model by investing in credit assets directly on balance sheet, complementing our primary portfolio of interest rate sensitive investments. This strategy is designed to achieve durable risk-adjusted returns over various interest rate and economic cycles by pairing shorter floating-rate credit securities with our longer, fixed-rate agency portfolio. The diversification strategy reaches beyond simply our investment in credit sectors. Within each discipline we have diversified our investments to produce balanced cash-flows and leverage profiles. Our breadth of investment options and robust capital allocation process combined with careful risk management enables us to take advantage of market inefficiencies and rotate into credit markets when dislocations occur and pricing is attractive on a risk-adjusted, relative value basis.