Fannie, Freddie Woes: New Problems For mREIT ETFs

While both stocks and ETFs are trading lower today, the iShares Barclays MBS Bond Fund (NYSEArca: MBB) is trading slightly higher because investors perceive the government’s presence in the U.S. MBS market as necessary. MBB offers exposure to U.S. agency mortgage-backed bonds, including Government National Mortgage Association bonds as well as Fannie and Freddie securities.

MBB is also vulnerable to rising rates because low-rate MBS are among the bonds the Fed has been purchasing. However, a complete exit by Uncle Sam from the U.S. mortgage market appears unlikely anytime in the next couple of year and that lingering presence could serve as a positive backstop for MBB.

iShares Barclays MBS Bond Fund

ETF Trends editorial team contributed to this report. Tom Lydon’s clients own shares of REM.