U.S. Markets close in 31 mins

Mortgage Backed Securities ETF (VMBS) Hits New 52-Week High

Sanghamitra Saha

For investors looking for momentum, Vanguard Mortgage-Backed Securities ETF VMBS is probably a suitable pick. The fund just hit a 52-week high, up roughly 6.3% from its 52-week low of $50.19/share.

But does it have more gains in store? Let’s take a look at the fund and its near-term outlook to gain an insight into where it might be headed:

VMBS in Focus

The fund seeks to replicate the performance of the Bloomberg Barclays U.S. MBS Float Adjusted Index. The product charges 7 bps in fees. The fund has amassed $10.5 billion in AUM.

Why the Move?

The Fed has enacted two rate cuts in the third quarter and is likely to enact one more in the upcoming October meeting. Probability of an October Fed rate cut rise following subdued manufacturing data. As of Oct 3, 2019, yield on benchmark treasury notes was 1.54% versus 1.65% yield noted on Oct 1. Low rate environment is great for mortgage-backed securities. As demand for residential and commercial real estate rises in the near future, mortgage financing companies are bound to see an increase in their asset books.

More Gains Ahead?

It seems VMBS might perform decently given a positive weighted alpha of 5.60. Want key ETF info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free>>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Vanguard Mortgage-Backed Securities ETF (VMBS): ETF Research Reports
 
To read this article on Zacks.com click here.
 
Zacks Investment Research
 
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report