Mortgage-backed securities also are the most vulnerable to rising benchmark rates because the underlying loans aren’t likely to be refinanced as often, leaving investors saddled with low-returning assets longer than expected , Al Yoon reported for the Wall Street Journal.

What could weigh on ETFs such as MBB going forward is that rising interest rates translate to higher rates on consumer mortgages. The yields on MBS that investors see are the rates at which banks sell those bonds to Fannie and Freddie. The higher the rates, the more Fannie and Freddie pay and that trickles down to the borrower.

The Fed has been buying $40 billion in MBS per month, which has been a boon for MORT and REM as the two ETFs are up an average of 19.5% in the past year. For now, the issue may not be a Fed exit from the MBS market, but rather if the exit comes sooner than investors would like, American Capital’s Gary Kain said in an interview with Bloomberg.

Market Vectors Mortgage REIT Income ETF

ETF Trends editorial team contributed to this article.