On Wednesday, Regan Capital, an adviser firm, made its first foray into ETFs by launching the Regan Floating Rate MBS ETF (NYSE Arca: MBSF).
MBSF has a net expense ratio of 0.49%. Regan Capital actively manages the fund, which primarily focuses on floating rate residential mortgage-backed securities (RMBS). According to the fund prospectus, RMBS investments will constitute at least 80% of the investment assets within MBSF.
“Agency Residential Mortgage-Backed Securities give investors the best of both worlds: the potential to earn a higher yield than a traditional Treasury bond, while also seeking to benefit from the U.S. government’s ironclad financial backing,” Regan Capital Chief Investment Officer Skylar Weinand said.
The adviser firm expresses intent within the prospectus to seek low-risk securities in MBSF’s portfolio. Many of those securities are backed by the U.S. government. They also have minimized sensitivity to interest rate changes. However, Regan Capital notes that some securities are not guaranteed or fully backed by the U.S. government. Those include securities issued by Freddie Mac and Fannie Mae.
The prospectus notes that Regan Capital also implements bottom-up analysis to seek significantly undervalued investments along with other trading opportunities. It further looks to apply a top-down macro perspective to analyze real estate fundamentals, interest rates, and the broader economic outlook.
“We aim to democratize access to Residential Mortgage-Backed Securities for all investors with the ETF wrapper, which also provides liquidity and low fees for investors,” added Weinand.
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