VABS vs VMBS

VABSCVirtus Newfleet Securitized Income ETF

VMBSAVanguard Mortgage-Backed Securities ETF

In short

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.

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

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

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

• 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.

• 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

• 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.

• 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 VABS profile⁠

Full VMBS profile⁠