MBB Profile
The iShares MBS ETF is designed to provide investors with exposure to the U.S. mortgage-backed securities (MBS) market. Under normal market conditions, the fund will allocate at least 80% of its assets to securities that are included in its underlying index, as well as to to-be-announced (TBA) securities that have economic characteristics similar to those of the index's component securities. TBAs are a type of forward contract used in the mortgage market to buy or sell mortgage-backed securities at a future date.
The underlying index tracked by the fund is composed of U.S. government and government agency mortgage-backed securities. These securities are issued by entities such as Fannie Mae, Freddie Mac, and Ginnie Mae, and are designed to provide investors with a relatively stable source of income. By investing primarily in these types of securities, the fund aims to replicate the performance of the index, which is intended to reflect the overall market for U.S. MBS.
In addition to investing in the index's component securities, the fund may also hold TBAs, which are used to manage liquidity and other trading considerations. The ETF is structured to maintain a high level of correlation with the underlying index, with at least 90% of its assets invested in fixed-income securities that are part of the index or have similar characteristics. This ensures that the fund closely tracks the performance of the MBS market.
Managed by BlackRock Fund Advisors (BFA), the iShares MBS ETF offers investors a way to gain exposure to a diversified portfolio of mortgage-backed securities, aiming to provide income and potential capital preservation. The fund’s focus on high-quality MBS issued by government-sponsored enterprises and its strategic use of TBAs positions it to deliver performance that closely aligns with its benchmark, making it a suitable option for investors seeking stable returns from the mortgage-backed securities sector.
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