MBB vs VABS

MBBAiShares MBS ETF

VABSCVirtus Newfleet Securitized Income 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.

VABS The agency-mortgage aisle is wall-to-wall cheap index trackers. VABS is the odd one out: an actively managed securitized-income fund from Virtus, run by the Newfleet bond team since its 2021 launch, paying monthly.

Stated mandate

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

VABS The Fund seeks income through an actively managed exchange-traded fund strategy.

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.

• VABS No index to hug. The managers choose their spots across securitized bonds and can reposition as the market shifts, something the passive mortgage trackers in this group (SPMB, VMBS, MBB) are not built to do.
• Income is the stated job, and the cash arrives monthly rather than on a quarterly drip.
• Spread across roughly 200 bond positions, so no single deal carries the portfolio. Diversification is one of this fund's stronger suits within its mortgage-bond peer group.
• Despite being the active outlier in a cohort of low-cost giants, it lands in the upper half of its mortgage-bond peer group on our overall read.

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.

• VABS Active management carries an active price: 0.39% a year, versus 0.03% at VMBS and 0.04% at SPMB and MBB. You are paying for the manager's judgment, not the index.
• A small fund that trades thinly next to the index heavyweights, which can mean wider bid-ask spreads and more care needed on order size and timing.
• With no benchmark to track, results ride on the team's security selection rather than on a published index you can look up in advance.

Full MBB profile⁠

Full VABS profile⁠