SPMB vs VMBS

SPMBAState Street SPDR Portfolio Mortgage Backed Bond ETF

VMBSAVanguard Mortgage-Backed Securities ETF

In short

SPMB The no-frills way to own America's mortgage bonds. SPMB tracks the Bloomberg U.S. MBS Index for four basis points, a fraction of what the typical mortgage-bond ETF charges, and pays income monthly.

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

SPMB The fund seeks to track, before fees and expenses, the price and yield performance of the Bloomberg U.S. MBS Index.

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

• SPMB Four basis points a year, against a 0.35% median for mortgage-bond ETFs. Cost is where this fund does its loudest talking.
• Runs the same Bloomberg U.S. MBS Index as iShares' MBB at the same 0.04% fee, and undercuts MBBA, which tracks that index for far more.
• Roughly 2,700 mortgage bonds in a single line item, inside a multi-billion-dollar fund that trades actively, with distributions paid monthly.
• Trading since 2009, and one of the strongest implementations in its mortgage-bond peer group.

• 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

• SPMB Homeowners refinance when rates fall, so mortgage bonds get paid back early and rally less than Treasuries. That quirk is built into the index, not the fund.
• Prices move with interest rates and the monthly payout floats with the portfolio. This is a bond fund, not a cash substitute.
• US mortgages only. No Treasuries, no corporates, no credit spice. A building block for a bond sleeve rather than the whole sleeve.

• 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 SPMB profile⁠

Full VMBS profile⁠