MBB tracks an index of U.S. investment grade agency mortgage-backed securities and pays a 30-day SEC yield of about 3%.
“Government-sponsored mortgage bonds typically pay more interest than do comparable U.S. Treasury bonds. However, because homeowners can refinance or sell their homes at any time, mortgage-bond cash flows are very unpredictable. This ‘prepayment risk’ is why the bonds pay higher interest rates,” Morningstar analyst Timothy Strauts writes in a profile of the fund.
Other ETFs that invest in the sector include SPDR Barclays Capital Mortgage Backed Bond ETF (NYSEArca: MBG), Vanguard Mortgage-Backed Securities ETF (NYSEArca: VMBS), iShares Barclays CMBS Bond Fund (NYSEArca: CMBS) and iShares Barclays GNMA Bond Fund (NYSEArca: GNMA).
iShares Barclays MBS Bond Fund (NYSEArca: MBB)
