ETF Trends
ETF Trends

We have seen some improved trading volume relative to the average levels lately in the largest Mortgage-Backed bond ETF MBB (iShares MBS, Expense Ratio 0.27%) accompanied by some inflows stemming from creations.

Approximately $250 million has entered MBB on a rally in the underlying bonds in the portfolio (and generally a rally in bond prices across markets), and we note that this particular fund is the largest in this specific Fixed Income sub-category with assets topping $7.3 billion at this point.

In terms of AUM size relative to other funds in this space, MBB is an absolute giant with a substantial edge over the next largest fund which is VMBS (Vanguard Mortgage-Backed Securities, Expense Ratio 0.12%) which has $1.46 billion in assets under management.

Several other specialized funds exist here but are substantially smaller in terms of asset size, and are listed as follows from largest to smallest: CMBS (iShares CMBS, Expense Ratio 0.25%, $179 million in AUM), MBG (SPDR Barclays Capital Mortgage Backed Bond, Expense Ratio 0.20%, $150 million in AUM), GNMA (iShares GNMA Bond, Expense Ratio 0.15%, $60 million in AUM), MBSD (FlexShares Disciplined Duration MBS, Expense Ratio 0.20%, $18.6 million in AUM), and LMBS (First Trust Low Duration Mortgage Opportunities, Expense Ratio 0.65%, $5 million in AUM).

MBB itself has of course the advantages of size and tenure on the market, having debuted back in 2007, and a high level of familiarity among portfolio managers and ETF strategists who specify and perhaps build models in the Fixed Income ETF space, thus it is a regular recipient of asset flows when model rotation moves occur in the marketplace.

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