GNMA vs VMBS

GNMABiShares GNMA Bond ETF

VMBSAVanguard Mortgage-Backed Securities ETF

In short

GNMA Most mortgage ETFs blend Fannie, Freddie and Ginnie collateral. This one holds only Ginnie Mae pass-throughs, the slice whose guarantee is explicitly backed by the full faith and credit of the US government, for 0.11% a year.

VMBS The plumbing of the U.S. housing market in one ticker: pooled home loans from Ginnie, Fannie and Freddie, tracked by index for 0.03% a year, with income paid monthly.

Stated mandate

GNMA The fund seeks to track an index of mortgage-backed securities issued by the Government National Mortgage Association (GNMA).

VMBS The fund seeks moderate and sustainable current income by investing primarily in U.S. agency mortgage-backed pass-through securities issued by GNMA, FNMA, and FHLMC.

Why people hold it

• GNMA Pure Ginnie Mae mandate: the guarantee on these pass-throughs is backed by the full faith and credit of the United States, while federal support for Fannie and Freddie paper is implicit.ginniemae.govcbo.gov
• Costs 0.11% a year, under a third of the typical mortgage-bond ETF fee, and BlackRock covers the fund's ordinary operating expenses out of that management fee.sec.gov
• Monthly payer, roughly 300 Ginnie Mae pools, same index mandate since its 2012 launch. Sits in the upper half of its mortgage-backed peer group on our review.

• VMBS 0.03% a year is the cheap end of the mortgage-bond aisle: SPMB and MBB charge 0.04%, JMTG 0.24%, and the typical peer runs far higher.
• Agency pass-throughs from GNMA, FNMA and FHLMC. Credit isn't the main variable here; rates and mortgage behavior are.vanguard.com
• Trading since 2009, a multi-billion-dollar fund holding roughly 300 pools and paying monthly. Boring in the way bond ballast is supposed to be.
• Sits in the top quartile of its mortgage-bond peer group, one of the stronger builds in a crowded, look-alike category.

Worth knowing

• GNMA Thinly traded next to the category's giants (MBB, VMBS), so bid/ask spreads and order size matter more here than in the big broad-agency funds.
• Cheap, not the cheapest shelf: VMBS and SPMB charge less, though they hold broad agency MBS rather than Ginnie Mae collateral alone.
• The guarantee covers payment, not price. Interest-rate moves and homeowner prepayments still drive results, and prepayments can hand principal back sooner than planned.sec.govginniemae.gov

• VMBS Mortgages don't keep a schedule. Homeowners refinance when rates fall, returning cash to reinvest at lower yields; when rates rise, payoffs slow and bonds stretch out.vanguard.com
• The mandate is current income from one slice of the bond market. No Treasuries, no corporates, no equity kicker.
• Share prices move with interest rates, so this behaves like a bond fund, not a cash parking spot.vanguard.com

Full GNMA profile⁠

Full VMBS profile⁠