Vanguard Mortgage-Backed Securities ETF (NASDAQ: VMBS)

最新ニュース Vanguard Mortgage-Backed Securities ETF (NASDAQ:VMBS)

Vanguard Mortgage-Backed Securities ETF

The fund employs an indexing investment approach designed to track the performance of the Bloomberg Barclays U.S. MBS Float Adjusted Index. This index covers U.S. agency mortgage-backed pass-through securities. To be included in the index, pool aggregates must have at least $250 million currently outstanding and a weighted average maturity of at least 1 year. All of the funds investments will be selected through the sampling process, and under normal circumstances, at least 80% of the funds assets will be invested in bonds included in the index.

In the week ended Feb. 21, U.S. mortgage rates declined to their lowest levels this year, Bloomberg reported, presenting potential opportunities for investors in mortgage-backed securities (MBS) ETFs. Although the decline was not deep enough to trigger increased lending activities immediately, the persistent market uncertainty might give real estate investors something to cheer about one of these days. <a href="https://www.benzinga.com/etfs">ETFs are a great way</a> to stock up now to reap the benefits of MBS later.
Three MBS-backed ETFs that combine high credit quality with attractive yields, are:
Vanguard Mortgage-Backed Securities ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/VMBS#NASDAQ">VMBS</a>): VMBS seeks to track the performance of the Bloomberg U.S. MBS Float Adjusted Index, primarily investing in U.S. agency mortgage-backed pass-through securities issued by Ginnie Mae, Fannie Mae and Freddie Mac. The fund offers a low expense ratio of 0.04% and provides investors with a diversified portfolio of MBS.
Simplify MBS ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MTBA#NYSE">MTBA</a>):
<a href="https://www.simplify.us/news-media/simplify-launches-mtba-etf-revolutionizing-exposure-mortgage-backed-securities">Launched </a>in November 2023, MTBA focuses on higher-coupon MBS, aiming to provide enhanced yield and total return potential. The fund invests in To-Be-Announced (TBA) contracts, which are MBS forward contracts offering improved liquidity and operational simplicity. MTBA is designed to capitalize on dislocations in the MBS market and offers a yield of nearly 6%. The expense ratio is even lower at 0.25%.
Schwab Mortgage-Backed Securities ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SMBS#NYSE">SMBS</a>):
SMBS <a href="https://www.businesswire.com/news/home/20241119907055/en/The-Schwab-Mortgage-Backed-Securities-ETF-SMBS-Starts-Trading">provides </a>exposure to U.S. agency mortgage-backed securities, aiming to track the performance of the Bloomberg US MBS Index. The fund offers investors access to a diversified portfolio of MBS with a competitive expense ratio of 0.03%, making it a viable option for those seeking income diversification.
Also Read: <a href="https://www.benzinga.com/25/02/43873151/mortgage-rates">Mortgage Rates Fall For Fifth Week Straight, But Remain Close To 7%</a>
Word Of Caution
Investors should assess their individual risk tolerance and investment objectives before considering MBS ETFs, as these securities are subject to interest rate risk and prepayment risk.
What Happened?
The recent decline in mortgage rates is largely attributed to a drop in Treasury yields, as investors seek safe havens amid market volatility and economic data indicating weak consumer and business sentiment. The 10-year Treasury yield fell to 4.28% on Tuesday, its lowest since mid-December, driven by concerns over U.S. economic growth and weak consumer and business sentiment. Despite the decline in rates, borrowing costs and home prices remain high. The average 30-year fixed mortgage rate of 6.88% is still a modest decrease from last week, insufficient to significantly boost borrowing, according to Financial Times.
This led to a 3.6% decrease in refinancing applications and a marginal increase in home purchase applications, as <a href="https://www.bloomberg.com/news/articles/2025-02-26/us-mortgage-rates-decline-to-6-88-lowest-level-this-year?sref=TBDibEcD">reported </a>by the Mortgage Bankers Association (MBA) and cited by Bloomberg. The MBA survey, conducted weekly since 1990, encompasses responses from mortgage bankers, commercial banks and thrifts, covering over 75% of all retail residential mortgage applications in the U.S.
However, near-term inflation expectations have risen due to anticipated impacts from President Trump&#8217;s tariffs, with two-year break-even rates reaching their highest levels since early 2023. In this environment, MBS ETFs present a potential opportunity for investors seeking to diversify their bond portfolios and capitalize on the current market dynamics.
Read Next: 
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<li><a href="https://www.benzinga.com/25/02/43972272/etfs-are-booming-heres-why">ETFs Are Booming, Here&#8217;s Why</a></li>
</ul>
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Mortgage Rates Hit 2025 Lows: 3 MBS ETFs To Consider

2025 promises to be a transformative year for the <a href="https://www.benzinga.com/real-estate">U.S. housing market</a>, offering fresh opportunities but also keeping everyone on their toes. 
Zillow Group Inc's (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/ZG#NASDAQ">ZG</a>) (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/Z#NASDAQ">Z</a>) latest <a href="https://www.zillow.com/research/2025-housing-predictions-34620/">predictions</a> reveal shifting dynamics for buyers, sellers, and renters. Investors in the Vanguard Real Estate ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VNQ#NYSE">VNQ</a>), the Schwab US REIT ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SCHH#NYSE">SCHH</a>), and the Real Estate Select Sector SPDR Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLRE#NYSE">XLRE</a>) track these dynamics closely.
Read Also: <a href="https://www.benzinga.com/trading-ideas/short-ideas/24/12/42265808/top-3-real-estate-stocks-that-may-plunge-this-quarter">Top 3 Real Estate Stocks That May Plunge This Quarter</a>
Here are five trends to watch closely:
<h2 class="wp-block-heading">1. Breathing Room For Buyers Amid A Modest Market</h2>
Good news for buyers: more inventory is set to hit the market, giving you time to weigh options and negotiate harder. Zillow forecasts a modest 2.6% home value growth and an uptick in existing home sales to 4.3 million, signaling a gradual thaw in a market that's been tight for years.
<h2 class="wp-block-heading">2. Mortgage Rate Whiplash</h2>
Mortgage rates will remain the wildcard. While Zillow expects rates to ease overall, their volatility could unsettle even seasoned buyers. Expect refinancing booms during dips and a roller-coaster affordability picture throughout the year.
Investors in the iShares MBS ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MBB#NYSE">MBB</a>) and the Vanguard Mortgage-Backed Securities ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VMBS#NYSE">VMBS</a>) may face heightened uncertainty.
<h2 class="wp-block-heading">3. Buyers Markets Spread Westward</h2>
Currently concentrated in the Southeast, buyers markets are predicted to expand into the Southwest, giving buyers more power in negotiations. 
If mortgage rates fall significantly, however, sellers might regain the upper hand as competition heats up.
<h2 class="wp-block-heading">4. The Rise of Smaller, Smarter Homes</h2>
Forget large mansions. Compact, purpose-driven homes are taking center stage. Listings describing properties as "cozy" have surged 35%, reflecting a cultural shift toward sustainable, affordable living. Urban condos are also stabilizing in value, according to Zillow, drawing buyers back to city life.
<h2 class="wp-block-heading">5. Renter Perks Are On Borrowed Time</h2>
A surge in multifamily construction has made 2024 a renter-friendly year, with concessions like free rent and parking aplenty. But Zillow predicts these perks will wane by late 2025 as the rental market tightens. Renters with pets will remain a dominant force, pushing property managers to adopt more pet-friendly policies or risk losing tenants.
2025's housing market is set to be more active and buyer-friendly, but unpredictability looms large. From mortgage rate swings to shifting buyer trends, staying agile and informed will be key to making the most of this evolving landscape.
Read Next: 
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<li><a href="https://www.benzinga.com/real-estate/24/12/42287030/real-estate-veteran-pens-open-letter-to-donald-trump-resurrecting-housing-will-require-innovative-and-daring-solutions">Real Estate Veteran Pens Open Letter To Donald Trump: &#8216;Resurrecting Housing Will Require Innovative And Daring Solutions&#8217;</a></li>
</ul>
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5 Housing Market Trends For 2025: What Zillow's Forecast Means For You

Mortgage <a href="https://www.benzinga.com/real-estate/24/06/39488167/prospective-homebuyers-get-little-respite-as-mortgage-rates-expected-to-plateau-freddie-mac-predicts">applications have slowed</a> as the average interest rate for 30-year mortgages has gone back above 7%.
Loan requests declined 2.6% on a seasonally adjusted basis as of June 28 from a week earlier, <a href="https://www.mba.org/news-and-research/newsroom/news/2024/06/26/mortgage-applications-increase-in-latest-mba-weekly-survey">according</a> to data from the Mortgage Bankers Association's Weekly Applications Survey.
The average contract interest rate for 30-year fixed-rate mortgages with loan balances below $766,550 or less rose to 7.03% from 6.93%. The same interest rate for 15-year fixed-rate mortgages increased to 6.56% from 6.46%.
"Mortgage rates moved higher last week, crossing the 7 percent mark, even as the latest inflation data has kept market expectations alive for a rate cut from the Fed later this year," Chief Economist Mike Fratantoni said in a statement.
&#8220;Purchase applications decreased the final full week of June, even as both new and existing inventories have increased over the past few months.&#8221;
Also Read: <a href="https://www.benzinga.com/top-stories/24/06/39421719/mortgage-rates-fall-for-third-straight-week-with-signs-of-lower-inflation-fed-rates">Mortgage Rates Fall For Third Straight Week With Signs Of Lower Inflation, Fed Rates</a>
The Federal Reserve has kept its key interest rate between 5.25% and 5.50% as it aims to push a 3.4% <a href="https://www.benzinga.com/markets/equities/24/07/39603097/stocks-hold-steady-as-powell-reassures-on-disinflation-path-warns-about-debt-risks-tesla-rallies">rate of inflation</a> to 2%, but it does plan on cutting the rate once later this year.
Data released by Freddie Mac on<a href="https://freddiemac.gcs-web.com/news-releases/news-release-details/mortgage-rates-increase-5?_gl=1&#x2A;qrr0gi&#x2A;_gcl_au&#x2A;NDg3ODg4MTM1LjE3MjAwMjQwNjU.&amp;_ga=2.247265479.2136513647.1720024066-1273696089.1720024066"> Wednesday </a>showed the 30-year fixed-rate mortgage averaged 6.95%, up from 6.86% the previous week and 6.81% a year ago. The 15-year FRM averaged 6.25%, rising from 6.16% last week and slightly higher than the 6.24% average a year earlier.
Price Action: Mortgage lender stocks trended downward in Wednesday&#8217;s mid-morning trading. JPMorgan Chase &amp; Co. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/JPM#NYSE">JPM</a>) slipped 0.40% to $208.00, while Bank of America Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BAC#NYSE">BAC</a>) declined 0.28% to $40.81 and Wells Fargo &amp; Company fell 0.98% to $60.37.
Mortgage-backed security exchange-traded funds picked up ground by mid-morning. The iShares MBS ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/MBB#NASDAQ">MBB</a>) and the Vanguard Mortgage-Backed Securities ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/VMBS#NASDAQ">VMBS</a>) both rose 0.58%, while the SPDR Bloomberg Barclays Mortgage Backed Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MBG#NYSE">MBG</a>) moved up 0.11%.
Read Now: 
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<li><a href="https://www.benzinga.com/federal-reserve/24/07/39609586/rbc-calls-itself-a-nervous-and-jumpy-bull-as-it-raises-s-p-500-outlook">RBC Calls Itself &#8216;A Nervous And Jumpy Bull&#8217; As It Raises S&amp;P 500 Outlook</a></li>
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Markets

Mortgage Applications Fall As Rates Climb Back Above 7%

The recent spike in national mortgage rates stirred concerns among homebuyers and economists alike. With the 30-year fixed-rate mortgage (FRM) climbing to 6.88% on April 11, questions arise about the trajectory of <a href="https://www.benzinga.com/real-estate">the housing market.</a>
<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="874" height="644" src="https://editorial-assets.benzinga.com/wp-content/uploads/2024/04/11122010/Screenshot-2024-04-11-at-9.49.14-PM.png" alt="" class="wp-image-288021" srcset="https://editorial-assets.benzinga.com/wp-content/uploads/2024/04/11122010/Screenshot-2024-04-11-at-9.49.14-PM.png 874w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/04/11122010/Screenshot-2024-04-11-at-9.49.14-PM-300x221.png 300w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/04/11122010/Screenshot-2024-04-11-at-9.49.14-PM-768x566.png 768w" sizes="(max-width: 874px) 100vw, 874px" /></figure>
Chart Source: Freddie Mac
Additionally, other key indicators such as the 15-year fixed mortgage rate, which rose to 6.16%, signaled a broader trend of rate hikes.
Also Read: <a href="https://www.benzinga.com/markets/equities/24/03/37855254/are-you-a-housing-market-lock-in-high-mortgage-rates-result-in-people-not-living-in-homes-they-w">Are You A Housing Market Lock-In? High Mortgage Rates Result In &#8216;People Not Living In Homes They Would Prefer&#8217;</a>
<h1 class="wp-block-heading">Stubborn Inflation And The Fed To Blame</h1>
Per <a href="https://www.freddiemac.com/pmms">Freddie Mac</a>, mortgage rates have gradually increased through the year, due to persistent inflation and the reassessment of the Federal Reserve&#8217;s monetary policy trajectory. 
The latest inflation figures from March indicate minimal change, but the financial market&#8217;s response presents a contrasting economic outlook. The March estimate of 3.5% annual inflation growth fell within the range of 3.1% to 3.7%, while the Dow Jones Industrial Average experienced a significant decrease following the announcement. This is reminiscent of the unmet expectations of a recession from a year prior.
<h1 class="wp-block-heading">Worst Day For Mortgage Rates Since October 2022</h1>
On April 10, the average lender experienced a mortgage rate hike by 0.28%, almost equivalent to the 0.29% rise observed after the Feb. 2 jobs report. Mortgage News Daily <a href="https://www.mortgagenewsdaily.com/markets/mortgage-rates-04102024">described</a> this as &#8220;basically the worst day for mortgage rates since October 2022.&#8221;
Many analysts anticipated mortgage rates to drop below 7% in the current year. However, persistent inflation figures prevent rates from reaching the desired lower levels.
<h1 class="wp-block-heading">McBride&#8217;s Musings: An Expert&#8217;s Take</h1>
Greg McBride, CFA, chief financial analyst for Bankrate, said the uncertainty persists regarding whether the current inflationary trend is temporary or posed a substantial threat to the progress made in reducing inflation in 2023. He suggested that until there was a clearer consensus on the trajectory of inflation, it would be challenging for mortgage rates to significantly and consistently decline below 7 percent.
Despite hopes for rates to dip below 7%, stubborn inflation numbers thwart expectations, posing challenges for prospective homebuyers and the housing market as a whole. 
"The housing market will continue to be characterized by high home prices, high financing costs, and a limited number of homes for sale," McBride told Benzinga in <a href="https://www.benzinga.com/opinion/24/03/37938028/exclusive-interest-rates-rode-the-elevator-up-but-analyst-predicts-theyll-take-the-stairs-coming-dow">an exclusive interview</a>.
This might spell good news for those invested in the Vanguard Real Estate Index Fund ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VNQ#NYSE">VNQ</a>), the Schwab US REIT ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SCHH#NYSE">SCHH</a>), the Real Estate Select Sector SPDR Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLRE#NYSE">XLRE</a>) and the iShares U.S. Real Estate ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IYR#NYSE">IYR</a>). Rising home prices often reflect a healthy real estate market, which can boost the value of real estate assets held within these ETFs.
However, investors in mortgage ETFs such as the&nbsp;iShares MBS ETF&nbsp;(NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MBB#NYSE">MBB</a>) and the&nbsp;Vanguard Mortgage-Backed Securities Index Fund ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VMBS#NYSE">VMBS</a>) may want to remain wary of their holdings.
<h1 class="wp-block-heading">The Affordability Abyss</h1>
As experts weigh in on the implications of these developments, the affordability crisis deepens, compounded by limited housing inventory and stagnant wage growth. While navigating this landscape, the question is: are we witnessing the beginning of a sustained upward trend in mortgage rates?
Read Next: <a href="EXCLUSIVE: Interest Rates Rode The Elevator Up, But Analyst Predicts They'll Take 'The Stairs Coming Down'">EXCLUSIVE: Interest Rates Rode The Elevator Up, But Analyst Predicts They&#8217;ll Take &#8216;The Stairs Coming Down&#8217;</a>
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iShares Trust Dow Jones US Real Estate Fund Index

Will Mortgage Rates Pop Again? Homebuyers Combat An Affordability Crises

Interest rates are on everyone&#8217;s radar, but what&#8217;s the game plan amid the Federal Reserve&#8217;s decision to hold <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/03/37900527/federal-reserve-pushes-stocks-to-record-highs-as-rate-cuts-loom-nvidia-rallies-appl">steady for now</a>? 
Benzinga interviewed Greg McBride, CFA, Senior Vice President of Bankrate, for his exclusive insights on the current state of the economy and his expectations with the future.
Related: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/03/37900527/federal-reserve-pushes-stocks-to-record-highs-as-rate-cuts-loom-nvidia-rallies-appl">Federal Reserve Pushes Stocks To Record Highs As Rate Cuts Loom, Nvidia Rallies, Apple Faces Legal Woes: This Week In The Markets</a>
<h2 class="wp-block-heading">Interest Rates May Take The Stairs Coming Down</h2>
McBride offered some very actionable insights. In response to a question about the Fed keeping interest rates unchanged this time, McBride said, &#8220;Interest rates took the elevator going up, but they're going to take the stairs coming down.&#8221; 
Per McBride, savers can capitalize on potentially lucrative returns that outpace inflation, from savings accounts, money markets, and CDs, provided they shop around for optimal deals. For borrowers, the mantra remains clear: prioritize slashing high-cost credit card debt.
His advice? &#8220;Always make at least your minimum payment on time – you can always pay more later.&#8221; It&#8217;s about dodging those pesky overdraft fees and late charges.
<h2 class="wp-block-heading">Real Estate Enthusiasts, Brace Yourselves</h2>
McBride&#8217;s forecast suggests a seller&#8217;s market, with limited inventory dictating terms. And falling mortgage rates? They might not spell relief as home prices continue their upward trajectory. &#8220;The housing market will continue to be characterized by high home prices, high financing costs, and a limited number of homes for sale,&#8221; said McBride.
This should be good news for those invested in the Vanguard Real Estate ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VNQ#NYSE">VNQ</a>), the Schwab US REIT ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SCHH#NYSE">SCHH</a>), the Real Estate Select Sector SPDR ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLRE#NYSE">XLRE</a>) or the iShares U.S. Real Estate ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IYR#NYSE">IYR</a>). Rising home prices often reflect a healthy real estate market, which can boost the value of real estate assets held within these ETFs.
Investors in mortgage ETFs such as the iShares MBS ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MBB#NYSE">MBB</a>) and the Vanguard Mortgage-Backed Securities ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VMBS#NYSE">VMBS</a>) may see a mixed impact.
Rising home prices can increase the value of mortgage-backed securities (MBS) held within mortgage ETFs. This appreciation can lead to higher returns for investors holding these ETFs. However, higher home prices also make it more challenging for potential homebuyers to afford properties and/or to refinance their existing mortgages, potentially leading to decreased demand for mortgages.
Also Read: <a href="https://www.benzinga.com/real-estate/reit/24/03/37882885/10-real-estate-stocks-move-on-thursday-fed-rate-cut-possibility-sparks-rally-for-troubled-sector">10 Real Estate Stocks Move On Thursday: Fed Rate Cut Possibility Sparks Rally For Troubled Sector</a>
<h2 class="wp-block-heading">Legislative Acts May Sway Sentiment, Let Diversified ETFs Steer Your Ship</h2>
When questioned on legislative juggernauts like the CHIPS Act and Infrastructure Act that promise economic shifts, McBride&#8217;s advice is refreshingly pragmatic: &#8220;Investors are best served building a low-cost, well-diversified portfolio.&#8221; Forget chasing fleeting trends; it&#8217;s consistency that builds wealth, he says.
Exchange-traded funds are a low-cost, diversified way to gain exposure and build wealth consistently. The SPDR S&amp;P 500 ETF Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>), the iShares Core S&amp;P 500 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IVV#NYSE">IVV</a>) and the Vanguard S&amp;P 500 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VOO#NYSE">VOO</a>) are the most popular and largest ETFs for U.S. equity exposure.
When asked about legislative acts impacting consumer sentiment and spending behavior, McBride said, &#8220;When Americans have jobs and paychecks coming in, the money gets spent.&#8221; Legislative acts may sway sentiment, but economic fundamentals steer the ship.
Read Next: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/03/37922752/value-growth-stocks-trade-at-record-highs-but-long-term-leadership-lies-with-one-an">Value, Growth Stocks Trade At Record Highs But Long-Term Leadership Lies With One: Analyst</a>
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EXCLUSIVE: Interest Rates Rode The Elevator Up, But Analyst Predicts They'll Take 'The Stairs Coming Down'

Investors have accumulated record amounts of cash and equivalent assets as a way to hedge against the <a href="https://www.benzinga.com/analyst-ratings/analyst-color/23/10/35150923/why-this-cboe-global-markets-analyst-is-bullish-at-time-of-geopolitical-turmoil">volatility of recent times.</a>
Now, fund managers are urging investors to put that money to work, as decreasing inflation and the potential for an economic slowdown may lead to profitable opportunities in the bond markets.
<a href="https://www.ici.org/research/stats/mmf">According</a> to ICI Global, capital invested into money market fund assets reached a record of $5.73 trillion last week. Money market funds are characterized by having very low volatility and very high liquidity, holding large amounts of cash and other low-risk securities in their portfolios.
Investors tend to lean towards money market investing in times of uncertainty, when availability of cash is a prime concern and tolerance to risk is low. Money market funds give better returns than cash deposits on banks, which is why investors have been flocking towards these assets since the Fed began its tightening cycle last year, which has now taken the federal funds rate to between 5.25% and 5.50%.
But, with <a href="https://www.benzinga.com/analyst-ratings/analyst-color/23/11/35783516/october-inflation-drop-triggers-markets-rally-economists-reassess-after-surprising-">inflation dropping to more comfortable levels</a>, bond managers are suggesting that now is an optimal time to allocate some of those assets into the bond market.
Minutes from the Federal Open Market Committee&#8217;s November meeting revealed that Fed participants view the current interest rate level of between 5.25% and 5.5% as restrictive, potentially signaling the end of their intensive rate hike campaign in light of recent positive inflation data and acknowledging the significant tightening of financial <a href="https://www.benzinga.com/economics/macro-economic-events/23/11/35903926/november-fomc-minutes-fed-leans-toward-rate-stability-as-inflation-eases">conditions in recent months.</a>
Also Read: <a href="https://www.benzinga.com/news/23/11/35905071/musk-and-the-magnificent-9-how-worlds-10-richest-people-bagged-400b-in-2023">Musk And The Magnificent 9: How World&#8217;s 10 Richest People Bagged $400B In 2023</a>
Greg Whiteley, head of Government Securities Investing at DoubleLine <a href="https://www.bloomberg.com/news/articles/2023-11-21/bond-managers-of-2-5-trillion-make-case-for-leaving-cash-behind?srnd=premium&amp;sref=TBDibEcD">told</a> Bloomberg that the range of 4.5% to 5% yield "is a safe place to be buying bonds."
The two-year treasury bond currently yields at 4.89% while the 5- and 10-year bonds have a yield of 4.44%.
Whiteley and other fund managers contend that the Federal Reserve&#8217;s actions are effectively slowing down the economy, a necessary step to reduce inflation back to the 2% target. Economist Gary Shilling <a href="https://www.benzinga.com/analyst-ratings/analyst-color/23/11/35867664/legendary-economist-foresees-30-drop-in-stocks-predicts-recession-and-feds-credibil">this week predicted that a recession is imminent</a>, potentially including a 30% drop in stock values, which further supports the strategy of redirecting investments towards safer and comparatively higher-yielding assets such as bonds.
Piper Sandler strategist Michael Kantrowitz echoed the same prediction over the weekend, based on several data points coming<a href="https://www.benzinga.com/analyst-ratings/analyst-color/23/11/35866823/top-wall-street-strategist-expresses-worries-about-looming-recession-we-are-at-the-"> from housing, profits, and employment.</a> 
The housing market showed a slight uptick last week but<a href="https://www.benzinga.com/news/23/11/35836886/housing-market-shows-a-slight-uptick-but-remains-slow-ahead-of-beazer-homes-earnings-call"> continues at historically low levels</a>, with mortgage rates sustaining prices that are unaffordable for the majority of homebuyers.
Other economists, however, lean towards a soft-landing scenario, which would mean a return to pre-pandemic<a href="https://www.benzinga.com/analyst-ratings/analyst-color/23/11/35820947/us-economy-gearing-towards-soft-landing-amid-inflation-concerns-says-economists"> inflation levels without a recession</a>.
Bond fund managers argue that sticking to cash "means you miss all the potential price appreciation if the economy starts to slow," as Ryan Murphy of Capital Group told Bloomberg.
The managers also pointed to <a href="https://www.benzinga.com/money/what-are-mortgage-backed-securities">mortgage bonds</a> as a sector that could lift off next year if interest rates come down. Mortgage-backed securities consist of pools of mortgages that lenders bundle together and sell as securities to third parties in order to free up more cash to continue lending.
While these securities gained a bad reputation for their role in the 2008 financial crash, increased regulation has made them appealing again. Although they still carry more risk than cash or government bonds, they're generally considered less risky than corporate bonds, because there&#8217;s real estate as collateral, and they carry less volatility than stocks.
These include Vanguard Total Bond Market ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/BND#NASDAQ">BND</a>) and iShares Core US Aggregate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/AGG#NYSE">AGG</a>) for the broad ranging bond market, and iShares MBS ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/MBB#NASDAQ">MBB</a>) as well as Vanguard Mortgage-Backed Securities ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/VMBS#NASDAQ">VMBS</a>) for specific exposure to mortgage-backed securities.
Now Read: <a href="https://www.benzinga.com/fintech/23/11/35904576/sam-altman-in-discussions-about-openai-return-as-employees-revolt-and-msft-picks-up-the-pieces">Sam Altman In Discussions About OpenAI Return As Employees Revolt, Microsoft Picks Up The Pieces</a>
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Ready For Recession? Fund Managers Advocate Shift To Treasury, Mortgage Bonds

Congressman Kurt Schrader of Oregon was last covered by Benzinga for his trades on Ameren Corporation (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/aee#NYSE">AEE</a>) and SLB (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/slb#NYSE">SLB</a>), which were made on Oct. 13 and Oct. 26, respectively. Since those trades were made, Ameren has shown returns of roughly 15.6%, while SLB is <a href="https://www.benzinga.com/news/large-cap/22/11/29601078/house-energy-committee-member-buys-2-paying-dividend-stocks-sells-conocophillips-shares">down roughly 9.7%</a>.
Furthermore, SLB has been declining ever since it hit its 52-week high of $56.04 per share, which would have resulted in positive returns of 7.8% if actualized.
Schrader, a Democrat, has made over 450 trades in the past three years. His most trade was Nuveen ESG Large-Cap ETF (BATS: <a class="ticker" href="https://www.benzinga.com/stock/nulc#BATS">NULC</a>), which he recently sold between $15,000 to $50,000 in shares on Nov. 8, per Capitol Trades.
See Also:&nbsp;<a href="https://www.benzinga.com/news/large-cap/22/12/29962461/this-congressman-is-up-over-28-on-amd-stock-buy-also-sees-gains-on-these-2-dividend-stocks">This Congressman Is Up Over 28% On AMD Stock Buy, Also Sees Gains On These 2 Dividend Payers</a>
Besides selling shares of this exchange-traded fund (ETF), Schrader purchased shares in three monthly dividend-paying <a href="https://www.benzinga.com/money/vanguard-review/">Vanguard</a> ETFs.
Continue reading to learn more about these trades and ETFs.
<ul>
<li><a href="https://www.benzinga.com/money/vanguard-review/">Vanguard</a> Total International Bond ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/bndx#NASDAQ">BNDX</a>) is offering a dividend yield of 4.31% or $2.12 per share annually, using monthly payments, with a track record of increasing its dividends once in the past year. The Vanguard Total International Bond ETF holds more than 4,500 bonds from both developed and emerging non-U.S. markets, with an average effective maturity of 8.9 years. This ETF is passively managed, using index sampling and employs hedging strategies that seek to mitigate uncertainty in exchange rates. Schrader purchased a range of between $1,000 to $15,000 in shares of Vanguard Total International Bond ETF for $47.68 per share, traded on Nov. 8 in an undisclosed filing, reported Capitol Trades.</li>
<li>Vanguard Intermediate-Term Bond ETF (ARCA: BIV) is offering a dividend yield of 3.61% or $2.73 per share annually, through monthly payments, with a track record of increasing its dividends once in the past year. The Vanguard Intermediate-Term Bond ETF invests in U.S. government high-quality investment grade corporate and investment grade international dollar-denominated bonds, with an average effective maturity of 7.2 years. Congressman Schrader purchased a range of between $1,000 to $15,000 in shares of Vanguard Intermediate-Term Bond ETF for $72.49 per share, traded on Nov. 8 in an undisclosed filing, reported Capitol Trades.</li>
<li>Vanguard Mortgage-Backed Securities ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/vmbs#NASDAQ">VMBS</a>) is offering a dividend yield of 2.19% or $1.01 per share annually, making monthly payments, with an inconsistent track record of increasing its dividends. The Vanguard Mortgage-Backed Securities ETF invests primarily in U.S. agency mortgage-backed pass-through securities issued by Ginnie Mae, Fannie Mae, and Freddie Mac, with a dollar-weighted average maturity of three to 10 years. Schrader purchased a range of between $1,000 to $15,000 in shares of Vanguard Mortgage-Backed Securities ETF for $44.18 per share, traded on Nov. 8 in an undisclosed filing, reported Capitol Trades.</li>
</ul>
As of Sept. 29, 72 congress members violated the federal STOCK Act, which was formed to prevent insider trading. Although lawmakers like Sen. Elizabeth Warren (D-MA) and Sen. Steve Daines (R-MT) want to go a step further and ban members of Congress and their spouses from owning or <a href="https://www.benzinga.com/markets/asia/22/12/29945181/this-congresswoman-saw-returns-of-over-20-on-this-aerospace-company-check-out-3-dividend-stocks-she">trading individual stocks</a>.

Government

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Offerings

Politics

Events

BNDX

NULC

This US Rep Bought 3 Vanguard ETFs Paying Monthly Dividends, Saw Gains In Recent Trades

Investors who remember the role various real estate-related securities played in global financial crisis may be skittish about embracing an exchanged-traded fund dedicated to mortgage-backed securities, but some funds dedicated to this asset class are relatively low risk and offer investors an avenue for generating yields that are better than cash investments.
<h3>Ginnie, Freddie And Fannie</h3>
MBS, also known as &ldquo;mortgage pass throughs,&rdquo; are accessible via the Vanguard Mortgage-Backed Securities ETF (NASDAQ: <a class="ticker" href="/stock/vmbs#NASDAQ">VMBS</a>). VMBS is a cost-efficient avenue to the MBS market and this ETF invests mostly in U.S. agency mortgage-backed pass-through securities issued by Government National Mortgage Association "Ginnie Mae," Federal National Mortgage Association (OTC: <a class="ticker" href="/stock/fnma#OTC">FNMA</a>) and Federal Home Loan Mortgage Corp (OTC: <a class="ticker" href="/stock/fmcc#OTC">FMCC</a>).
<h3>VMBS's Holdings, Explored</h3>
VMBS holds 552 issues, over 96 percent of which yield between 3&ndash;5 years and 5&ndash;10 years. The ETF has a 30-day SEC yield of around 1.8 percent, which is below the yield on 10-year Treasuries, but well above what investors will earn with money markets and other cash investments.
&ldquo;Since the fund&#39;s November 2009 inception, its index-tracking record has been solid,&rdquo; said <a href="http://beta.morningstar.com/articles/810458/a-cheap-diversified-mortgage-backed-securities-etf.html">Morningstar in a recent note</a>. &ldquo;From November 2009 through March 2017, the fund trailed its index by 0.04 percent on an annualized basis, net of its 0.07 percent fee. Its three- and five-year annualized returns of 2.5 percent and 1.9 percent were on par with its index peers. However, the fund&#39;s return lagged the average actively managed mortgage fund by 19 basis points and 14 basis points over the trailing three- and five-year periods, respectively.&rdquo;
<h3>Looking Beyond The '08-'09 Crisis</h3>
Given that VMBS debuted in late 2009, investors can only guess how the ETF would have performed if it had been around for the darkest days of the financial crisis. What is clear is that MBS would beloved by banks because the securities allowed them to move mortgages off their books by selling MBS to investors, thereby positioning the banks to lend more money. The system worked for a while until banks loaned too much money to subprime borrowers and when those borrowers started defaulting, the housing market suffered.
The Federal Reserve absorbed some toxic MBS, but has said it plans to unload some of those securities this year. Still, VMBS is up more than 1 percent year-to-date. The ETF has returned 6.7 percent over the past three years with minimal volatility, but that performance is well behind those offered by medium-term and long-dated Treasury ETFs, which are more sensitive to interest rate changes.
&ldquo;As of March 2017, Fannie Mae and Freddie Mac securities took up approximately 70 percent of the fund. These securities offer slightly higher coupons than Ginnie Mae bonds to compensate for default risk as they are not explicitly guaranteed by the U.S. government,&rdquo; said Morningstar.
VMBS charges just 0.07 percent per year, making it cheaper than 92 percent of competing strategies, <a href="https://personal.vanguard.com/us/funds/snapshot?FundId=3148&amp;FundIntExt=INT#tab=0">according to issuer data</a>.
Related Links:
<a href="https://www.benzinga.com/trading-ideas/long-ideas/17/05/9516481/cambria-launches-new-core-equity-etf">Cambria Launches New Core Equity ETF</a>
<a href="https://www.benzinga.com/trading-ideas/long-ideas/17/05/9483824/renewed-interest-in-a-nifty-junk-bond-etf">Renewed Interest In A Nifty Junk Bond ETF</a>

Personal Finance

FMCC

FNMA

Get A Mortgage To Pay You With This ETF

One of the primary reasons investors have embraced exchange-traded funds over the years is lower fees relative to actively managed equivalents. ETF issuers continue rewarding that faith with a &ldquo;race to the bottom&rdquo; outlook on ETF expenses.
Predictably, Vanguard plays a big role in the trend of lower ETF fees, and after a recent spate of fee cuts from rival issuers, the Pennsylvania-based fund giant is again making its low fee presence felt.
On Thursday, Vanguard, the second-largest U.S. ETF issuer, announced fee reductions on 35 mutual fund classes, including 11 ETFs. But before we get to that good news, there is some bad news ... sort of.
<h3>Fee Raise</h3>
Vanguard slightly raised the annual expense ratio on the Vanguard Health Care ETF (NYSE: <a class="ticker" href="/stock/vht#NYSE">VHT</a>) to 0.1 percent from 0.09 percent. Fidelity, one of Vanguard&#39;s chief competitors, offers the ETF industry&#39;s<a href="http://www.benzinga.com/trading-ideas/long-ideas/16/10/8556957/fidelity-has-a-say-in-etf-fee-tussle"> least expensive lineup</a> of sector ETFs.
<h3>Fee Cuts</h3>
The 11 ETF fee cuts unveiled by Vanguard include a significant portion of the issuer&#39;s fixed income lineup. All of the following saw annual fees reduced to 0.07 percent from 0.1 percent:
<ul>
<li>Vanguard Extended Duration Treasury ETF (NYSE: <a class="ticker" href="/stock/edv#NYSE">EDV</a>).</li>
<li>Vanguard Intermediate-Term Bond ETF (NYSE: <a class="ticker" href="/stock/biv#NYSE">BIV</a>).</li>
<li> Vanguard Intmdte Tm Govt Bd ETF (NASDAQ: <a class="ticker" href="/stock/vgit#NASDAQ">VGIT</a>).</li>
<li>Vanguard Long Term Corporate Bond ETF (NASDAQ: <a class="ticker" href="/stock/vclt#NASDAQ">VCLT</a>).</li>
<li>Vanguard Lg Term Govt Bd ETF (NASDAQ: <a class="ticker" href="/stock/vglt#NASDAQ">VGLT</a>).</li>
<li>Vanguard Mortgage Bkd Sects ETF (NASDAQ: <a class="ticker" href="/stock/vmbs#NASDAQ">VMBS</a>).</li>
<lI>and the Vanguard Short Term Corporate Bond ETF (NASDAQ: <a class="ticker" href="/stock/vcsh#NASDAQ">VCSH</a>).</li>
</ul>
Three of Vanguard&#39;s mega-cap equity ETFs now sport annual expense ratios <a href="https://pressroom.vanguard.com/nonindexed/Fact-sheet-first-wave-expense-ratio-changes-122216.pdf">of 0.07 percent</a>, down from 0.09 percent. Those ETFs are the Vanguard Mega Cap ETF (NYSE: <a class="ticker" href="/stock/mgc#NYSE">MGC</a>), Vanguard Mega Cap 300 Growth Index ETF (NYSE: <a class="ticker" href="/stock/mgk#NYSE">MGK</a>) and the Vanguard Mega Cap Value Index ETF (NYSE: <a class="ticker" href="/stock/mgv#NYSE">MGV</a>).
<h3>Fee Wars</h3>
&ldquo;In 2004, when Vanguard managed $6 billion in ETF assets, the average expense ratio for Vanguard&rsquo;s ETFs was 0.22 percent. Today, Vanguard manages $593 billion in U.S. ETF assets. The average expense ratio of the firm&rsquo;s ETFs is 0.12 percent, or less than one-third that of the 0.53 percent industry average,&rdquo; said Vanguard<a href="https://pressroom.vanguard.com/news/Press-release-VG-announces-first-wave-expense-ratio-changes-12-22-16.html"> in a statement</a>.
Vanguard&#39;s latest fee cuts answer <a href="https://www.benzinga.com/trading-ideas/long-ideas/16/12/8824318/blackrock-fee-cuts-extend-into-smart-beta-realm">two such moves </a>this year, including one this month, by rival BlackRock, Inc. (NYSE: <a class="ticker" href="/stock/blk#NYSE">BLK</a>) and one fee reduction announcement by Charles Schwab Corp (NYSE: <a class="ticker" href="/stock/schw#NYSE">SCHW</a>).

Broad U.S. Equity ETFs

SCHW

VCLT

VCSH

VGIT

VGLT

Vanguard Has Its Say In ETF Fee War

One of the primary reasons advisors and investor love Vanguard exchange traded funds are the low fees. Pennsylvania-based Vanguard, the third-largest U.S. ETF issuer, has some of the lowest fees in the ETF business, and the company has consistently shown during its time in the ETF industry that as its funds swell in size, it will pare annual expense ratios.

	&nbsp;

	Forgive the Christmas comparison, but Santa arrived a few days early for Vanguard investors this year as the company said Tuesday it is lowering fees on 21 of its ETFs. That includes Vanguard&#39;s group of 10 sector ETFs. With the new, lower fees, Vanguard undercuts rival Fidelity as having the least expensive sector ETFs on the market today.

	&nbsp;

	Previously, Vanguard sector ETFs charged 0.12 percent a year, or $12 per $10,000 on its sector ETFs. Now, the Vanguard Health Care ETF (NYSE: <a class="ticker" href="/stock/vht#NYSE">VHT</a>) sports an annual fee of just 0.09 percent while other popular Vanguard sector offerings, such as the Vanguard Information Technology ETF (NYSE: <a class="ticker" href="/stock/vgt#NYSE">VGT</a>) and the Vanguard Consumer Staples ETF (NYSE: <a class="ticker" href="/stock/vdc#NYSE">VDC</a>), will charge 0.1 percent per year. VGT is known for having <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/10/5941514/with-one-exception-apple-etfs-calm-ahead-of-earnings">one of the largest weights</a> to Apple Inc. (NASDAQ: <a class="ticker" href="/stock/aapl#NASDAQ">AAPL</a>) among all ETFs.&nbsp;

	&nbsp;

	&ldquo;Vanguard continues to set the standard as the industry&rsquo;s low-cost leader, reducing costs not just on a subset of products, but across our funds and ETFs,&rdquo; said Vanguard CEO Bill McNabb <a href="https://pressroom.vanguard.com/content/press_release/Press_Release_Vanguard_Reports_Lower_Expense_Ratios_53_Funds_ETFs_122215.html">in a statement</a>. &ldquo;We have a track record of nearly 40 years of lowering the cost of investing for our clients and we have every intention of continuing to lower the cost of investing.&rdquo;&nbsp;

	&nbsp;

	Eight fixed income ETFs issued by Vanguard also saw annual fees reduced by 17 percent to 0.1 percent from 0.12 percent. The group includes the Vanguard Long-Term Corporate Bond ETF (NASDAQ: <a class="ticker" href="/stock/vclt#NASDAQ">VCLT</a>), Vanguard Long-Term Government Bond ETF (NASDAQ: <a class="ticker" href="/stock/vglt#NASDAQ">VGLT</a>), Vanguard Mortgage-Backed Securities Index ETF (NASDAQ: <a class="ticker" href="/stock/vmbs#NASDAQ">VMBS</a>) and the Vanguard Intermediate-Term Bond ETF (NYSE: <a class="ticker" href="/stock/biv#NYSE">BIV</a>).

	&nbsp;

	Vanguard also announced lower fees on its mega-cap style ETFs. The Vanguard Mega Cap ETF (NYSE: <a class="ticker" href="/stock/mgc#NYSE">MGC</a>) and the Vanguard Mega Cap Value ETF (NYSE: <a class="ticker" href="/stock/mgv#NYSE">MGV</a>) now charge 0.06 percent per year, down from 0.08 percent, while the Vanguard Mega Cap Growth ETF (NYSE: <a class="ticker" href="/stock/mgk#NYSE">MGK</a>) is charging 0.08 percent, down from 0.1 percent.

Intraday Update

AAPL

Vanguard Is At It Again; Lowers Fees On 21 ETFs

DA Davidson downgrades Vanguard Mortgage-Backed Securities ETF (NASDAQ: <a class="ticker" href="/stock/vmbs#NASDAQ">VMBS</a>) from undefined to Underperform.

Downgrades

DA Davidson Downgrades Vanguard Mortgage-Backed Securities ETF to Underperform

Stifel Nicolaus initiates coverage on Vanguard Mortgage-Backed Securities ETF (NASDAQ: <a class="ticker" href="/stock/vmbs#NASDAQ">VMBS</a>) with a Hold rating.

Stifel Nicolaus Initiates Coverage on Vanguard Mortgage-Backed Securities ETF at Hold

Not surprisingly, Vanguard, the third-largest U.S. ETF sponsor, has something to say about the ongoing 2012 ETF fee battle. Pennsylvania-based, known for being one of the ETF industry's low-cost leaders, announced fee reductions for 11 of its ETFs. The fee reductions took effect last week, <a href="https://advisors.vanguard.com/VGApp/iip/site/advisor/researchcommentary/article/IWE_NewsDec2012ExpenseRatio">according to a statement issued by Vanguard</a>.

The 11 Vanguard ETFs that are now home to lower fees include the Vanguard Intermediate-Term Corporate Bond (NASDAQ: <a class="ticker" href="/stock/vcit#NASDAQ">VCIT</a>), which now has an expense ratio of 0.12 percent down from 0.14 percent. The Vanguard Intermediate-Term Government Bond ETF (NASDAQ: <a class="ticker" href="/stock/vgit#NASDAQ">VGIT</a>), the Vanguard Long-Term Corporate Bond ETF (NASDAQ: <a class="ticker" href="/stock/vclt#NASDAQ">VCLT</a>) and the Vanguard Long-Term Government Bond ETF (NASDAQ: <a class="ticker" href="/stock/vglt#NASDAQ">VGLT</a>) also saw fee reductions to 0.12 percent per year from 0.14 percent.

Other fee reductions include the Vanguard Mortgage-Backed Securities Index ETF (NASDAQ: <a class="ticker" href="/stock/vmbs#NASDAQ">VMBS</a>) going to 0.12 percent from 0.15 percent. The Vanguard Russell 1000 Value Index ETF (NASDAQ: <a class="ticker" href="/stock/vonv#NASDAQ">VONV</a>) now charges 0.15 percent down from 0.16 percent while the Vanguard Russell 2000 Index ETF (NASDAQ: <a class="ticker" href="/stock/vtwo#NASDAQ">VTWO</a>) saw its fees reduced to 0.21 percent from 0.22 percent.

Vanguard lowered fees on another small-cap ETF, taking the expense ratio on the Vanguard Russell 2000 Value Index ETF (NASDAQ: <a class="ticker" href="/stock/vtwv#NASDAQ">VTWV</a>) to 0.32 percent per year from 0.33 percent. The Vanguard Russell 3000 Index ETF (NASDAQ: <a class="ticker" href="/stock/vthr#NASDAQ">VTHR</a>) is now charging 0.15 percent down from 0.16 percent.

The Vanguard Short-Term Corp Bond Index ETF (NASDAQ: VSCH) and the Vanguard Short-Term Government Bond Index ETF (NASDAQ: <a class="ticker" href="/stock/vgsh#NASDAQ">VGSH</a>) both saw fee cuts to 0.12 percent per year from 0.14 percent.

Over the past year, a broad swath of ETF issuers have lowered fees in an effort to attract fresh capital from investors. Vanguard's most recent fee-cut announcement is by no means the firm's first and issuers such as Charles Schwab (NYSE: <a class="ticker" href="/stock/schw#NYSE">SCHW</a>) and State Street's (NYSE: <a class="ticker" href="/stock/stt#NYSE">STT</a>) State Street Global Advisors (SSgA) have announced fee reductions of their own. SSgA is the second-largest U.S. ETF sponsor.

BlackRock's (NYSE: <a class="ticker" href="/stock/blk#NYSE">BLK</a>) iShares, the world's largest ETF issuer and the firm often viewed as Vanguard's primary rival, announced fee cuts of its own earlier this year. In late November, Invesco's (NYSE: <a class="ticker" href="/stock/ivz#NYSE">IVZ</a>) PowerShares unit, the fourth-largest U.S. ETF sponsor, <a href="http://www.benzinga.com/news/12/11/3128183/powershares-fires-its-own-shot-in-etf-fee-war">signaled it would not be left out of the fee war</a> by announcing lower fees on six of its ETFs.

For its part, Vanguard's fee cuts may not be a direct response to what rival firms are doing, but rather the result of the firm's corporate structure and its ability to drive cost savings through economies of scale.

"Other investment firms may lower costs as a business strategy to attract assets," the firm said in the statement. "For Vanguard, our unique client-owned corporate structure is what drives the low costs of our funds. Since we are a mutually owned firm, low costs are an outcome that is directly tied to how much it costs us to manage our funds. Economies of scale and a focus on keeping operating costs low have resulted in a long track record of Vanguard lowering costs across the board."

For more on ETFs, click <a href="http://www.benzinga.com/etfs">here</a>.

Short Ideas

New ETFs

Emerging Market ETFs

Small Cap

After-Hours Center

VCIT

VGSH

VONV

VTHR

VTWO

VTWV

Vanguard Fires 1 More Shot in 2012 ETF Fee War

For some income investors, quarterly or annual dividends just aren't enough. They want their dividends and they want them now. Or they want them on a more frequent basis, say monthly. There are hundreds of stocks that pay monthly dividends. Throw in the many closed-end funds that do so as well and the number of monthly dividend payers grows even larger.

Oddly enough, the universe of ETFs that pay dividends on a monthly is still sparsely populated even though the number of <a href="http://www.benzinga.com/analyst-ratings/analyst-color/12/04/2508319/s-p-likes-two-dividend-etfs-one-not-so-much-sdy-vym-icf">dividend ETFs on the market</a> is robust and continues to grow.

Those looking for ETFs with a monthly payout have to do some homework, but we'll alleviate the burden here with a few ETFs that can boost your monthly cash flow.

Global X Super Dividend ETF (NYSE: <a class="ticker" href="/stock/sdiv#NYSE">SDIV</a>)
The Global X Super Dividend is just six weeks shy of its first birthday and in those ten months of trading, the fund has proven its mettle as a legitimate income play. SDIV's current distribution yield is almost 12.3%, according to Global X data, and the fund's <a href="http://www.benzinga.com/markets/bonds/12/04/2508554/sixer-6-etfs-yielding-6-or-more-sdiv-aud-emfn">equal-weight approach</a> could prove beneficial going forward. 

SDIV is international in scope as the U.S. accounts for less than 34% of the fund's weight with Australia, the U.K. and Canada figuring prominently in the fund's mix. Global X confirmed for Benzinga that SDIV does pay a monthly dividend.

iShares Barclays 1-3 Year Credit Bond ETF (NYSE: <a class="ticker" href="/stock/csj#NYSE">CSJ</a>)
Several of the monthly dividend ETF payers are bond funds and <a href="http://us.ishares.com/product_info/fund/distributions/CSJ.htm">CSJ is one of them</a>. The yield isn't exciting at just 1.6%, but CSJ is appealing to conservative investors because it's a large ($9.37 billion in AUM), cheap (0.2% expense ratio) fund that can help fill a fixed income void within a portfolio. Nearly all of CSJ's holdings are high-grade bonds.

AdvisorShares Madrona Global Bond ETF (NYSE: <a class="ticker" href="/stock/fwdb#NYSE">FWDB</a>)
FWDB, which invests in at least 12 global bond classes that cover the entire global investable bond universe, is akin to a bond fund of funds because it's holdings are other bond ETFs. The iShares iBoxx $ Investment Grade Corp Bond ETF (NYSE: <a class="ticker" href="/stock/lqd#NYSE">LQD</a>), the Vanguard Mortgage-Backed Securities Index ETF (NYSE: <a class="ticker" href="/stock/vmbs#NYSE">VMBS</a>) and the iShares iBoxx $ High Yield Corporate ETF (NYSE: <a class="ticker" href="/stock/hyg#NYSE">HYG</a>) combine for over 41% of FWDB's weight and yes, the fund pays its dividends monthly.

PowerShares Emerging Markets Sovereign Debt Portfolio (NYSE: <a class="ticker" href="/stock/pcy#NYSE">PCY</a>)
A prime example of the <a href="http://www.benzinga.com/markets/bonds/12/03/2430506/3-em-bonds-etfs-your-broker-forgot-to-mention-emcb-pcy-lqd">popularity of emerging markets bonds ETFs</a> PCY currently yields 5.3% and is a monthly dividend payer. 

PCY, which will turn five years old later this year, is home to 64 holdings and over $1.7 billion in AUM. Top country allocations currently include Peru, Brazil, Pakistan, Qatar, Poland and the Philippines. 

For more on dividend ETFs, please click <a href="http://www.benzinga.com/markets/bonds/12/04/2508554/sixer-6-etfs-yielding-6-or-more-sdiv-aud-emfn">HERE</a>.

Pre-Market Outlook

FWDB

PowerShares Emerging Markets Sovereign  Portfolio

SDIV

4 ETFs For Monthly Dividend Hunters (SDIV, PCY, CSJ)

On a day when markets are soaring due to some positive economic data here in the U.S., some investors may be thinking that the real estate market is finally turning the quarter. It's probably too early to make that call, but now could be the time to at least start prepping for a rebound in the mortgage market.

Betting on the mortgage market is tricky to say the least. The financial crisis proved as much. However, there's no need for investors to get involved to with the complex securities that spelled the demise of so many banks. 

No sir. The proper way to bet on the mortgage market these days is with ETFs and we imagine that's probably something your broker neglected to mention.

SPDR KBW Mortgage Finance ETF (NYSE: <a class="ticker" href="/stock/kme#NYSE">KME</a>):
The SPDR KBW Mortgage Finance ETF, with an expense ratio of 0.35%, tracks an index comprised of mortgage bankers, processors and marketers. That's not the problem with this ETF. The problem is KME is heavily allocated (37.6%) to home builders and no one knows when those stocks are going to rebound. There is more than eight months of housing supply on the market as we speak and that glut is terrible news for home builders. KME needs the economy to turn in a hurry to captivate investors.

SPDR Barclays Capital Mortgage Backed Bond ETF (NYSE: <a class="ticker" href="/stock/mbg#NYSE">MBG</a>):
As a bond play, the SPDR Barclays Capital Mortgage Backed Bond ETF has held nicely year-to-date as in its positive. MBG has an expense ratio of 0.32% and nearly $39 million in assets under management, but its roster is comprised almost entirely of U.S. government agency debt and that means a dividend yield of just 1.85%.

Vanguard Mortgage-Backed Securities ETF (NYSE: <a class="ticker" href="/stock/vmbs#NYSE">VMBS</a>):
The Vanguard Mortgage-Backed Securities ETF isn't significantly different from MBG unless the 0.15% expense ratio and $97.9 million in AUM are big deals to you. Kidding aside, VMBS is home to 261 bonds, almost all of which are U.S. government issues, with an average duration of three years. VMBS and MBG have charts that are basically twins.

Market Vectors Mortgage REIT Income ETF (NYSE: MORT):
MORT made its debut in August and has the potential to become the dominant equity-based mortgage ETF on the market. The new offering has attracted $4.5 million in AUM and with a 30-day SEC yield of 15.5% and a 12-month trailing yield of over 3%, more assets should be on the way. MORT sets itself apart from other REIT ETFs in that the ETF does not provide exposure to finance companies or savings associations.

Four Mortgage ETFs Your Broker Forgot to Mention

Last week AdvisorShares introduced four new actively managed ETFs from two different managers.  Madrona Funds, LLC is the sub-advisor and portfolio manager of three new “Madrona Forward” ETFs while American Wealth Management is the sub-advisor and portfolio manager for the “Meidell Tactical” ETF.  These additions bring the number of actively managed ETF listings to 40.  Despite the high level of interest, <a href="http://investwithanedge.com/5-obstacles-facing-active-etfs" target="_blank">actively managed ETFs still face numerous obstacles</a>.
The three Madrona Forward ETFs were launched 6/21/11 (<a href="http://www.marketwire.com/press-release/AdvisorShares-Set-to-Launch-3-Madrona-Funds-ETFs-1529025.htm" target="_blank">press release</a>) and are managed by Brian Evans, Robert Bauer, and Kristi Henderson.  All three members of the portfolio management team are CPAs whose investment approach is more fully described in the <a href="http://advisorshares.com/system/files/funds/public_docs/Whitepaper_Madrona_052011_0.pdf" target="_blank">Forward-Looking Broad-Market Investing White Paper</a> (pdf).  Further information is below and in the <a href="http://advisorshares.com/system/files/funds/public_docs/AdvisorShares%20Trust%20-%20Madrona%20Prospectus%20_FINAL%20as%20Filed%202_14_11__0.pdf" target="_blank">Madrona Prospectus</a> (pdf).
The AdvisorShares Meidell Tactical Advantage ETF (MATH), launched 6/23/11 (<a href="http://www.marketwire.com/press-release/AdvisorShares-Launches-the-Meidell-Tactical-Advantage-ETF-MATH-1530623.htm" target="_blank">press release</a>), will be managed by Laif Meidell of American Wealth Management.  The MATH strategy, based on a combination of relative strength and moving averages, tries to increase exposure to stronger areas of the market and shift to defensive positions when markets decline.  The new ETF is described below (following the three Madrona Forward ETFs).
AdvisorShares Madrona Forward Domestic ETF (FWDD) seeks to provide long-term capital appreciation above the S&amp;P 500 Index by selecting a portfolio of up to 500 of the largest U.S. traded equity securities.  It uses a weighted allocation system based on consensus analyst estimates of the present value of future expected earnings relative to the share price of each security.
The largest sector allocations are Consumer Discretionary 19%, Technology 17%, and Financials 15%.  FWDD currently holds about 480 stocks, all with allocations of less than 0.5% each.  The expense ratio estimate is 1.12% with a 1.25% cap.  Additional data is located in <a href="http://advisorshares.com/fund/fwdd" target="_blank">FWDD overview</a> and <a href="http://advisorshares.com/system/files/funds/public_docs/FWDD_FS_06202011.pdf" target="_blank">FWDD fact sheet</a> (pdf).
AdvisorShares Madrona Forward International ETF (FWDI) seeks to provide long-term capital appreciation above the MSCI EAFE Index and the BNY Mellon Classic ADR Index by selecting a portfolio primarily composed of at least 250 of the largest American Depositary Receipts (ADRs) from EAFE countries, Canada, and emerging markets.
FWDI currently has about 76% exposure to developed markets and 24% to emerging markets.  Regional allocations include Europe 50%, Pacific/Asia 40%, Americas 6%, and Africa/Middle East 4%.  FWDI presently holds about 260 stocks and ADRs, all with allocations of less than 0.8%.  The expense ratio estimate is 1.12% with a 1.25% cap.  Additional data is located in the <a href="http://advisorshares.com/fund/fwdi" target="_blank">FWDI overview</a> and <a href="http://advisorshares.com/system/files/funds/public_docs/FWDI_FS_06202011.pdf" target="_blank">FWDI fact sheet</a> (pdf).
AdvisorShares Madrona Forward Global Bond (FWDB) seeks investment results that exceed the price and yield performance of the Barclays Capital Aggregate Bond Index by selecting a diversified portfolio of fixed income, currency, and commodity pool exchange-traded products (ETPs).  FWDB uses a “fund of funds” approach and invests in at least 12 distinct global bond classes.  The manager uses a weighted allocation system based on historic yield curve analysis and a mean reversion strategy.
FWDB currently holds 16 ETFs with the largest allocations going to iShares iBoxx $ Investment Grade Corporate Bond (<a class="ticker" href="/stock/lqd#">LQD</a>) 18.1%, Vanguard Mortgage Backed Securities ETF (<a class="ticker" href="/stock/vmbs#">VMBS</a>) 14.1%, iShares iBoxx $ High Yield Corporate Bond (<a class="ticker" href="/stock/hyg#">HYG</a>) 13.2%, PowerShares International Corporate Bond (<a class="ticker" href="/stock/picb#">PICB</a>) 8.0%, and Vanguard Intermediate-Term Government Bond ETF (VGIT) 5.0%.  The expense ratio is capped at 1.15% assuming the acquired fund fees do not exceed 0.20%.  Additional data is located in the <a href="http://advisorshares.com/fund/fwdb" target="_blank">FWDB overview</a> and <a href="http://advisorshares.com/system/files/funds/public_docs/FWDB_FS_06202011.pdf" target="_blank">FWDB fact sheet</a> (pdf).
AdvisorShares Meidell Tactical Advantage ETF (MATH) seeks to provide long-term capital appreciation and capital preservation with a  strategy that can dynamically rebalance the portfolio from as much as 100% equity assets to 100% fixed income assets or cash, depending on market trends.  MATH is a “fund-of-funds” that seeks to minimize portfolio losses by rotating out of higher volatility assets and into lower volatility asset classes.
MATH is currently in a defensive posture with a Fixed Income allocation of 57%, Cash 14%, US Equities 24%, and Commodities 4%.  The fund has 17 holdings with the largest being Cash 14.1%, SPDR Barclays TIPS ETF (<a class="ticker" href="/stock/ipe#">IPE</a>) 9.6%, iShares Barclays TIPS Fund (<a class="ticker" href="/stock/tip#">TIP</a>) 9.6%, Vanguard Intermediate-Term Bond ETF (<a class="ticker" href="/stock/biv#">BIV</a>) 4.8%, and iShares S&amp;P Small Cap 600 Index Fund (<a class="ticker" href="/stock/ijr#">IJR</a>) 4.8%.  The gross expense ratio is 2.20% but will be capped at 1.60%.  Additional data is located in the <a href="http://advisorshares.com/fund/math" target="_blank">MATH overview</a>, <a href="http://advisorshares.com/system/files/funds/public_docs/MATH_FS_06222011.pdf" target="_blank">MATH fact sheet</a> (pdf), and the <a href="http://advisorshares.com/system/files/funds/public_docs/AdvisorShares%20-%20Meidell%20Tactical%20ETF%20Prospectus%20dated%20June%206%2C%202011%20-%20FINAL.pdf" target="_blank">MATH Prospectus</a> (pdf).
Disclosure covering writer, editor, and publisher:  No positions in any of the securities mentioned.  No positions in any of the companies or ETF sponsors mentioned.  No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.
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