It is an actively managed bond ETF that invests in investment-grade US residential mortgage-backed securities, actively allocating between agency and non-agency mortgage-backed securities. It actively manages interest rate, credit, and prepayment risk.

It suits income-oriented investors who want risk-adjusted returns from residential mortgage-backed securities and are willing to accept the credit risk that comes with active management.

It is an ETF run by DoubleLine using an active management approach.

The fund mainly invests in US residential mortgage-backed securities rated investment grade, while actively adjusting its weighting between agency and non-agency mortgage-backed securities. The portfolio managers actively manage interest rate, credit, and prepayment risk, seeking risk-adjusted returns across a variety of interest rate environments.

• Active allocation between agency and non-agency mortgage-backed securities
• Active management of interest rate, credit, and prepayment risk

Assets under management (AUM) stand at $685.1M, and the expense ratio is 0.39% per year.

Unlike passive mortgage-backed securities ETFs, the fund has greater return potential thanks to its non-agency allocation and active positioning, but it also adds credit risk and an active management fee.

Mortgage-backed securities prices move with the direction of interest rates, the pace of prepayments, and housing market conditions. In a rate-cutting phase, prepayments rise and price behavior can become complicated, while in a rising-rate phase prices can weaken, which makes active risk management important.

Capital tends to flow into active mortgage-backed securities ETFs when demand for income with attractive risk-adjusted returns is high, and it sometimes shifts into agency mortgage-backed securities ETFs when risk aversion toward credit strengthens.

Its strength is the pursuit of risk-adjusted returns through active mortgage-backed securities allocation, while its weaknesses are credit risk and the active management fee.

MBB, VMBS, and SPMB shown in the table are passive ETFs that invest in agency mortgage-backed securities at low cost, with lower credit risk. For more mortgage exposure, you can also compare the active mortgage-backed securities ETF MTGP, the investment-grade mortgage-backed securities ETF MBSD, and the commercial mortgage-backed securities ETF CMBS. They differ in credit composition, management style, and fees, so it is best to choose according to your risk tolerance.

Here are the points to review before investing in DMBS. As an active mortgage-backed securities ETF, it is important to check its credit composition, prepayment risk, fee level, and management approach together in advance.

Volatility can increase when credit concerns grow because of the non-agency allocation, and prepayments driven by interest rate changes can complicate the return profile. Active management fees can also eat into returns to some degree.

It is an active ETF suited to income-oriented investors who want risk-adjusted returns from residential mortgage-backed securities and are willing to accept the credit risk that comes with active management. To reduce credit risk, an agency mortgage-backed securities ETF may be the better choice, while DMBS can be an alternative for those who value active allocation.