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ETF Chart of the Day: Mortgage-Backed Securities


Recent price weakness in this particular segment of the fixed income markets has drawn some interest in the Mortgage Backed Securities ETF category.

The giant in the space is MBB (iShares Barclays MBS Fixed Rate Bond, Expense Ratio 0.31%) with $6.7 billion in assets under management currently.

The fund itself has dropped rather suddenly in recent sessions, falling from an intraday high of $108.33 to current levels right on its 50 day MA ($107.75), although trading volume has been rather uneventful lately.

MBB yields 1.46% currently and invests in investment grade fixed rate mortgage backed securities that are issued by GNMA, FNMA, and FHLMC. [Investors Tap Mortgage Bond ETFs for Yield, Rate Protection]

Other ways for portfolio managers to get exposure, and potentially specialized exposure, to this segment of the bond market include VMBS (Vanguard Mortgage Backed Securities, Expense Ratio 0.12%), CMBS (iShares Barclays CMBS Bond, Expense Ratio 0.25%), GNMA (iShares GNMA Bond, Expense Ratio 0.32%), MBG (SPDR Barclays Capital Mortage Backed Bond, Expense Ratio, 0.20%) and COBO (ProShares USD Covered Bond, Expense Ratio, 0.35%).

MBB debuted in 2007, and was the first fund in this class to market, so the quick innovation in this space (with five additional ETFs coming to market since 2009, when the term “Mortgage Backed” had this certain “toxicity” attached to it) is certainly a powerful story, especially given the tremendous upheaval that occurred in the space during the financial crisis of 2008/2009.

iShares Barclays MBS Fixed Rate Bond

For more information on Street One ETF research and ETF trade execution/liquidity services, contact Paul Weisbruch at pweisbruch@streetonefinancial.com.

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