Mortgage-backed securities (MBSs) ETFs have, somewhat quietly, welcomed some big new players in the past year.
Just this week, Eaton Vance debuted the Eaton Vance Mortgage Opportunities ETF (EVMO). This actively managed fund is a conversion from a Morgan Stanley mutual fund. EVMO came to market with $600 million in assets. And with it, it brought the firm’s well-known fixed income expertise to ETF land. (My colleague Elle Caruso Fitzgerald covered the news here.)
The launch follows other notable MBS ETF arrivals recently. Among them, the index-tracking Schwab Mortgage-Backed Securities ETF (SMBS), which launched last November, and the actively managed JPMorgan Mortgage-Backed Securities ETF (JMTG).
SMBS is already a $5.2 billion ETF in just over eight months of live trading. JMTG, which is a conversion from a J.P. Morgan mutual fund that launched in June, already boasts $3.7 billion in assets.
These new ETFs are giants at birth, with an asset base many ETFs can only dream of. This makes them some of the most successful launches of the year.
Why This Quiet Boom in MBS ETFs?
It looks like the category has been delivering some real value to investors looking for income, total returns, diversification, and portfolio protection.
The market opportunity is currently shaped by compelling valuations relative to corporate bonds and performance that is outpacing Treasuries this year.
If we look at the S&P U.S. Mortgage-Backed Securities Index as a broad benchmark for the category, MBSs have delivered nearly 5% in total return YTD.
According to DoubleLine, one of the best-known experts in the mortgage space, a mix of lower issuance (aka tighter supply), attractive valuations, and growing demand from banks and money managers have made for a strong backdrop for MBSs. Spreads, too, remain wide relative to 10-year averages for many securitized categories, especially agency MBS. So they are amply compensating for risk while offering some defensive protection.
Some MBS Could Benefit From a Slowing Economy
“With ongoing geopolitical uncertainty likely to contribute to broader macro volatility, government backed Agency MBS could benefit from a slowing economy,” the firm said in a commentary.
The DoubleLine Mortgage ETF (DMBS) focuses on residential MBSs. Jeffrey Gundlach, CEO and CIO of the firm, runs this actively managed portfolio. The fund is up 4.2% in 2025, and has over $500 million in assets.
In the case of Eaton Vance, the firm said in its launch statement that diversification is an important driver for MBSs as well.
“We believe agency MBS and other securitized assets can add a diversifying element to investor portfolios, especially those that are heavily exposed to U.S. corporate credit, because they tend to have different risk/return drivers,” Greg Finck, co-head of the Mortgage and Securitized investment team, said, according to our coverage.
Schwab, J.P Morgan, and Eaton Vance are big names making a quiet splash in the category. But they aren’t the only firms throwing their expertise into this space. For example, Regan Capital is another. The employee-owned asset manager recently brought to market the Regan Fixed Rate MBS ETF (MBSX).
MBSX is an actively managed portfolio of agency-backed fixed-rate residential MBSs designed to deliver current income. The fund comes on the heels of Regan’s first foray into the ETF space in 2024, with the launch of the Regan Floating Rate MBS ETF (MBSF).
These new funds join some heavyweights in MBS ETF investing, led by the 18-year-old iShares MBS ETF (MBB). It has more than $40 billion in total assets. The Vanguard Mortgage-Backed Securities ETF (VMBS) has nearly $15 billion. The SPDR Mortgage Backed Bond ETF (SPMB) isn’t far behind.
For more news, information, and analysis, visit VettaFi | ETF Trends.
