VMBS Stock Recent News

The anticipation of interest rate cuts is adding intrigue into the bond market, but mortgage rates are also starting to come down. In turn, this could spark interest in mortgage-backed securities (MBS).

With their attractive yields in the current market environment, bond funds of various varieties have been seeing increased demand. But to diversify a fixed income portfolio, investors may want to add mortgage-backed securities (MBS).

Residential and commercial real estate have their own respective headwinds amid a high-interest rate environment. Still, for fixed income investors wanting to diversify their income before rate cuts happen, mortgage-backed securities (MBS) still remain an option.

The Vanguard Mortgage-Backed Securities Index Fund ETF Shares is a potential beneficiary of the current cycle shift in the market. The VMBS ETF invests in U.S. agency mortgage-backed pass-through securities and offers a cost-effective platform with a low expense ratio. The VMBS fund provides steady income, low credit risk, and diversification benefits, but is susceptible to interest rate and refinancing risks.

The Vanguard Mortgage-Backed Securities ETF has experienced losses due to rising interest rates and bond yields. The FolioBeyond Alternative Income and Interest Rate Hedge ETF may provide a hedge against rising interest rate exposure. A 40/60 portfolio of VMBS/RISR could potentially generate a mid single-digit yield and high single-digit total returns.

The Vanguard Mortgage-Backed Securities Index Fund ETF offers a diversified portfolio of Agency MBS bonds. The Agency MBS asset class is attractive due to the historic wide spreads on Agency MBS bonds versus Treasuries, particularly on the long side of the curve. The Vanguard Mortgage-Backed Securities Index Fund ETF experienced a deep drawdown in 2022 due to higher rates, but is expected to outperform going forward.

One of the things I like to do from time to time in my InvestorPlace galleries is to have fun with my stock or ETF selection. Whether talking about an interesting company name or memorable ticker ETFs, it reminds me of the people who choose horses when betting at racetracks based on the jockey's racing silks, etc.

The VMBS provides exposure to agency-MBS securities. Historically, MBS have provided modest returns and low volatility. However, 2022 was especially bad for the VMBS ETF due to the portfolio's 6.9-year duration.

Corporate bonds and real estate investment trusts (REITs) are two ways fixed income investors can obtain more yield in order to try to outpace inflation as the Federal Reserve looks towards more rate hikes. “Although there are a number of differences between REITs and bonds, there are also some similarities,” Yahoo!

After a strong run following the pandemic, home prices are starting to come back down to earth. Rising interest rates have been tamping down home prices, which have been putting off prospective home purchasers.