FYI: Ten years ago, the world learned what a mortgage-backed security (MBS) was, as it was revealed that this once-obscure asset had played a starring role in the housing boom and subsequent crash.
The MBS hasn’t faded from use, however; far from it. In the years since the crash, the humble MBS has quietly become a mainstay in most major bond indices and bond portfolios, as a decade of anemic yields and high intra-asset correlations have sent investors searching for any investment that will give their bond portfolios a boost.
That’s a good thing, because despite their lingering bad reputation, MBSs—and MBS ETFs—actually have a lot to offer bond investors.
“I find it interesting that mortgage-backed securities aren’t more widely used in portfolios, because they have a lot of positive attributes,” said Stephen Laipply, BlackRock’s head of U.S. iShares Fixed Income Strategy.
Regards,
Ted
https://www.etf.com/publications/etfr/big-yields-mbs-etfs?nopaging=1
