Average Daily Volume
2.05M
Fund Overview
The Vanguard Mortgage-Backed Securities ETF (VMBS) seeks to track the performance of the Bloomberg U.S. MBS Float Adjusted Index, which measures the investment return of mortgage-backed securities (MBS) issued by government-sponsored enterprises (GSEs) like Fannie Mae, Freddie Mac, and Ginnie Mae. These securities are backed by pools of residential mortgages, providing exposure to the U.S. housing market. VMBS offers investors a way to gain diversified exposure to the MBS market with a low expense ratio, making it an attractive option for income-focused investors. The fund primarily holds agency MBS, which carry an implicit or explicit guarantee from the U.S. government, reducing credit risk compared to non-agency MBS.
- Asset Class
-
Bond
- Industry
-
Mortgage REITs
- Annual Dividend Rate
-
- Smart Beta
-
No
- Leveraged / Inverse
-
N/A / No
- Dividend Quality - Yield
-
- 4.09 %
- Currency Hedged
-
No
- Portfolio Turnover
-
79 %
- Dividend Date
-
Why Invest in the VMBS ETF?
Potential Benefits
- Provides exposure to U.S. mortgage-backed securities with government-backed credit quality.
- Low expense ratio compared to many fixed-income ETFs, enhancing net returns for investors.
- Offers monthly income through interest payments from mortgage-backed securities.
- Diversifies fixed-income portfolios beyond traditional Treasury and corporate bonds.
- Liquidity is generally strong due to the high trading volume of agency MBS.
Potential Risks
- Interest rate risk: Rising rates can lead to lower bond prices and potential capital losses.
- Prepayment risk: Homeowners may refinance mortgages when rates fall, reducing expected income.
- Yield may be lower than corporate or high-yield bonds, limiting income potential.
- Market liquidity can vary, especially during periods of financial stress.
- Inflation risk can erode the real value of fixed coupon payments over time.
RSI data unavailable or insufficient history.
Monthly Returns (%)
| Year |
Jan |
Feb |
Mar |
Apr |
May |
Jun |
Jul |
Aug |
Sep |
Oct |
Nov |
Dec |
| 2026 |
+0.3%
|
+1.7%
|
-1.6%
|
+0.3%
|
+0.3%
|
+0.1%
|
-1.3%
|
+0.5%
|
-3.4%
|
+0.1%
|
-
|
-
|
| 2025 |
+0.6%
|
+2.3%
|
0.0%
|
+0.4%
|
-0.8%
|
+1.7%
|
-0.3%
|
+1.6%
|
+1.1%
|
+0.8%
|
+0.7%
|
+0.2%
|
| 2024 |
-0.4%
|
-1.5%
|
+0.9%
|
-2.7%
|
+2.0%
|
+1.3%
|
+2.5%
|
+1.3%
|
+1.2%
|
-2.7%
|
+1.5%
|
-1.6%
|
| 2023 |
+3.4%
|
-2.6%
|
+2.0%
|
+0.5%
|
-0.7%
|
-0.2%
|
-0.1%
|
-0.9%
|
-3.0%
|
-2.2%
|
+5.3%
|
+4.1%
|
| 2022 |
-1.5%
|
-1.1%
|
-2.5%
|
-3.6%
|
+0.9%
|
-1.5%
|
+3.2%
|
-3.2%
|
-5.0%
|
-1.4%
|
+4.2%
|
-0.8%
|
| 2021 |
+0.1%
|
-0.6%
|
-0.6%
|
+0.6%
|
-0.3%
|
-0.1%
|
+0.5%
|
-0.1%
|
-0.3%
|
-0.3%
|
0.0%
|
-0.2%
|
| 2020 |
+0.7%
|
+0.9%
|
+1.3%
|
+0.5%
|
0.0%
|
-0.1%
|
+0.2%
|
+0.1%
|
-0.1%
|
-0.1%
|
+0.1%
|
+0.3%
|
| 2019 |
+0.8%
|
-0.1%
|
+1.4%
|
-0.1%
|
+1.1%
|
+0.7%
|
+0.4%
|
+0.9%
|
+0.1%
|
+0.3%
|
+0.1%
|
+0.2%
|
| 2018 |
-1.1%
|
-0.7%
|
+0.6%
|
-0.5%
|
+0.7%
|
+0.1%
|
0.0%
|
+0.5%
|
-0.6%
|
-0.6%
|
+0.9%
|
+1.7%
|
| 2017 |
+0.2%
|
+0.5%
|
+0.1%
|
+0.6%
|
+0.5%
|
-0.3%
|
+0.4%
|
+0.6%
|
-0.3%
|
+0.1%
|
-0.2%
|
+0.2%
|
< -5%
-5% to -2%
-2% to 0%
0%
0% to +2%
+2% to +5%
> +5%
Top Holdings (by weight)
| Symbol |
Company Name |
Weight |
No holdings data available.
Related ETFs: VMBS vs Peers
Comparison highlights key differences on cost, coverage, and focus within sector ETFs.
Investment Strategy
VMBS tracks the Bloomberg U.S. MBS Float Adjusted Index, which includes fixed-rate agency mortgage-backed securities that have at least one year remaining to maturity and a minimum of $1 billion in outstanding face value. The index is market-cap weighted, meaning larger MBS issues have greater representation in the fund. VMBS holds a diversified portfolio of these securities, which are primarily issued by GSEs (Fannie Mae, Freddie Mac) and Ginnie Mae. The fund is passively managed and rebalances as needed to maintain alignment with its benchmark index.
Frequently Asked Questions
What types of mortgage-backed securities does VMBS hold?
VMBS holds agency MBS issued by government-sponsored enterprises (GSEs) like Fannie Mae, Freddie Mac, and Ginnie Mae. These securities carry implicit or explicit government guarantees.
How often does VMBS pay dividends?
VMBS pays dividends monthly, reflecting the regular interest payments from its mortgage-backed securities holdings.
Is VMBS a good investment during rising interest rate environments?
Like most bond funds, VMBS may face price declines when interest rates rise due to its interest rate sensitivity. However, its government-backed securities maintain credit quality during market stress.
How does VMBS differ from a Treasury bond ETF?
While both are government-backed, VMBS holds mortgage securities which have prepayment risk and typically offer higher yields than Treasuries with similar durations.
What is the average duration of VMBS?
As of recent data, VMBS has had an average effective duration of approximately 5-7 years, making it moderately sensitive to interest rate changes.
Industry Overview
The mortgage-backed securities (MBS) market represents a significant segment of the U.S. fixed-income universe, with agency MBS comprising the majority of outstanding securities. The VMBS ETF provides exposure to this market, which is influenced by factors such as interest rate movements, housing market trends, and government housing policies. Agency MBS are considered relatively safe due to their government backing, but they still carry interest rate and prepayment risks. Investors use MBS ETFs like VMBS for income generation and portfolio diversification, particularly in low-yield environments where traditional bonds offer limited returns.
Alternative Comparison
Compared to similar MBS ETFs like MBB (iShares MBS ETF) and GNMA (iShares GNMA Bond ETF), VMBS stands out for its lower expense ratio (0.04% vs. MBB's 0.06% and GNMA's 0.15%). While all three funds focus on agency MBS, GNMA exclusively holds securities backed by the full faith and credit of the U.S. government (Ginnie Mae), while VMBS and MBB include a broader mix of agency MBS. VMBS's slightly longer duration compared to GNMA makes it more sensitive to interest rate changes but potentially offers higher yield.
Issuer Overview
Vanguard is one of the world's largest investment management companies, known for its low-cost index funds and ETFs. The firm has a long history of providing investors with efficient, transparent investment products. Vanguard's fixed-income ETFs, including VMBS, are designed to offer precise market exposure at minimal cost, aligning with the company's investor-first philosophy.
Conclusion
VMBS offers investors a cost-effective way to gain exposure to the U.S. agency mortgage-backed securities market. Its low expense ratio, government-backed credit quality, and monthly income make it an attractive option for fixed-income investors seeking diversification beyond traditional bonds. However, investors should be aware of the interest rate and prepayment risks inherent in MBS investments. As with any fixed-income investment, VMBS is best considered as part of a diversified portfolio strategy.
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