CAAA vs MBB

CAAADFirst Trust AAA CMBS ETF

MBBAiShares MBS ETF

In short

CAAA Most mortgage-bond ETFs buy Fannie and Freddie home loans. CAAA goes commercial: an actively run book of AAA-rated bonds backed by offices, hotels and apartment buildings, bought at the top rung of the deal structure.

MBB Launched in 2007, MBB is the plain-vanilla way to own U.S. agency mortgage bonds: one of the biggest and busiest funds in a small niche, tracking the Bloomberg U.S. MBS Index for four basis points.

Stated mandate

CAAA The Fund seeks to maximize long-term total return.

MBB The fund seeks to track an index composed of U.S. agency mortgage-backed securities.

Why people hold it

• CAAA Owns the AAA slice of non-agency commercial mortgage deals (conduit, single-asset single-borrower, CRE CLO), the senior rung with the first claim on interest and principal.ftportfolios.com
• Actively managed rather than index-replicating: at least 80% of net assets in CMBS rated AAA at purchase, with the strategy built around the AAA tier of the capital structure.ftportfolios.comftportfolios.com 2
• Charges 0.30% a year, below the median fee for mortgage-bond ETFs, and distributes monthly.

• MBB Four basis points to rent the entire agency mortgage market, against a category median near 0.35%. In low-coupon bond land, that gap compounds quietly.
• Scale is the real feature: one of the largest and most actively traded funds in the mortgage-bond category, which generally shows up as tighter spreads.
• Pays monthly, and the mandate stays narrow: an index of U.S. agency mortgage-backed securities, nothing exotic bolted on.
• Among the stronger builds in a thin peer group of mortgage-bond ETFs, on the combination of cost, trading friction and issuer staying power.

Worth knowing

• CAAA Agency-mortgage index funds cost a fraction of this (VMBS 0.03%, MBB 0.04%). The 0.30% buys active management and commercial, non-agency collateral instead of home-loan pools.
• Thinly traded next to the big agency mortgage funds, so bid-ask spreads can run wider.
• Launched in 2024, non-diversified, and concentrated in roughly 50 positions, all tied to commercial property credit. Short history, narrow book.ftportfolios.com

• MBB This is one slice of the bond market. Agency mortgage paper only, with no Treasuries or corporates alongside it.
• Mortgage bonds cut both ways with rates: borrowers refinance when yields fall and sit tight when they rise, so the portfolio's duration shifts underneath you.
• On price it's a photo finish: SPMB tracks the same index at the same 0.04%, and VMBS runs a basis point cheaper.

Full CAAA profile⁠

Full MBB profile⁠