MBB vs MBSD

MBBAiShares MBS ETF

MBSDBNorthern Trust Disciplined Duration MBS ETF

In short

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.

MBSD Agency mortgage bonds let their duration wander as homeowners refinance or sit tight. MBSD tracks an index built to keep that drift on a leash, offering mortgage-bond exposure with rate sensitivity set by rules instead of by the market's mood.

Stated mandate

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

MBSD The fund is designed to provide market-like exposure to mortgage-backed securities while limiting duration drift through a rules-based index methodology.

Why people hold it

• 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.

• MBSD The whole point is duration discipline: a rules-based index designed to give market-like mortgage-bond exposure while limiting duration drift, so rate sensitivity is governed by methodology.flexshares.com
• Charges 0.21% a year, less than the typical fee in the MBS ETF group, and it has been running since 2014 rather than arriving as a recent idea.
• Spreads across roughly 500 mortgage bonds and pays monthly, so income lands on a mortgage-payment rhythm instead of twice a year.

Worth knowing

• 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.

• MBSD Thinly traded. Spreads and limit orders matter more here than with the category's household names.
• Duration control carries a price tag: VMBS, MBB and SPMB track the broad agency mortgage market for single-digit basis points.
• Constraining duration means it is not built to move like the full mortgage-backed market. That is the design, but it is a different exposure, not a copy.flexshares.com

Full MBB profile⁠

Full MBSD profile⁠