MTBA: Agency MBS Carry, Limited Price Upside (Rating Downgrade)
Simplify MBS ETF is downgraded from buy to hold due to compressed mortgage spreads limiting price upside. MTBA's structural carry remains attractive, offering a 6.01% yield over the last 12 months, supporting its role as an income component. The ETF's active management and 0.15% expense ratio are justified by its strategy but are significantly higher than passive peers.
Non-Cuttable Expenses: A Hidden Opportunity For Financial Growth
Mortgages form the backbone of home affordability in America and represent an expense that cannot be cut without catastrophic household consequences. Utilities are in heavy demand, and operators can raise prices without losing customers. We discuss our top picks from these non-negotiable expenses, offering yields of up to 7.5%.
MTBA: High-Quality Agency MBS, Great Strategy, Above-Average Yield
The Simplify MBS ETF focuses on newly-issued agency mortgage-backed securities with high coupons. It sports a 6.0% dividend yield, backed by high-quality mortgages. Market conditions are quite favorable to MBS, with these securities outperforming treasuries and bonds for several years.
MTBA: A Solid Play On MBS Offering 6% Yield
MTBA ETF invests at least 80% in mortgage-backed securities, primarily from GNMA, FNMA, and FHLMC, focusing on high-yield opportunities. Portfolio construction targets a 3-10 year effective duration, balancing yield with interest rate sensitivity and prepayment risk. MTBA currently offers a 6% annual yield, distributing $0.25 monthly.
3 Lower Risk High Yield Picks
We look at ways to achieve great income while also minimizing risk. Come alongside High Dividend Opportunities but through secondary opportunities. Less reward, lower risk, but still wonderful income.
New Simplify ETF Focuses on Energy & Infrastructure
On Wednesday, Simplify Asset Management launched its latest fund, the Simplify Kayne Anderson Energy and Infrastructure Credit ETF (KNRG). An actively managed fund, KNRG looks to offer income with a secondary objective of capital appreciation.
Simplify Rolls Out Small-Cap Strategy ETF
Simplify has expanded its ETF lineup with the launch of the Simplify Piper Sandler US Small-Cap PLUS Income ETF (LITL) on the NYSE Arca today. The new fund combines exposure to U.S. small-cap stocks with the potential for monthly income through an options overlay strategy.
Now Is Still A Great Time To Consider MTBA
The Fed hiked rates by 525 basis points over a nearly two-year period, providing attractive yields across all fixed income asset classes. MBS, especially newly issued MBS, are offering great value relative to many other fixed income asset classes right now. The Simplify MBS ETF is a simple approach to investing in the MBS issued by Government-Sponsored Enterprises.
MTBA: Asymmetric Risk/Reward - Raise To A Buy
Investing in equities and credit markets is challenging due to high valuations; consider mortgage-backed securities for better value. MBS spreads are currently at multi-year highs as investors fear a rapid decline in interest rates and mortgage refinancings. Interest rates may be higher for longer as the U.S. economy remains resilient, and inflation progress has stalled. This should allow MTBA investors to earn an attractive spread vs. treasuries.
MTBA: MBS ETF, Above-Average 6.0% Yield
MTBA focuses on newly issued MBS with higher yields and lower duration, reducing risk and volatility. MTBA's exposure to interest rate risk may limit upside potential, but its low credit risk provides stability during downturns. The fund's 6.0% dividend yield is higher than that of treasuries and investment-grade bonds, and is its key selling point.
A Good Time To Consider MTBA
Fed hiked rates by 525bps over a nearly two-year period, providing attractive yields across all fixed income asset classes; but mortgage-backed securities spreads are trading substantially wider than their historical averages. Newly issued MBS, as executed in MTBA, is providing higher yield and less duration than the traditional MBS index. With expectations of a gradual cutting cycle, focused on the front-end, now looks like a great time to consider the simple yet powerful exposure to MBS that is executed inside MTBA.
