The fund invests in high-quality MBS issued by US government-sponsored agencies. It selects the newest vintage bonds, which reflect current market interest rates, to strengthen the portfolio's income-generating capacity.

It suits investors who want the relative safety of MBS but also seek higher income than the index and active responses to interest rate changes.

Launched in 2023 by Simplify, it is an actively managed ETF.

The fund uses TBA (to-be-announced) forward contracts to maximize exposure to newly issued, high-coupon MBS. It adjusts portfolio composition nimbly as interest rate volatility shifts, managing downside risk while capturing return opportunities.

• Concentrates on newly issued, higher-yielding MBS instead of older bonds
• Manages liquidity and exposure efficiently through TBA contracts

Assets under management (AUM) are $904.6M, and the expense ratio is 0.15% per year.

While passive MBS ETFs such as MBB and VMBS shown in the table hold the entire market in proportion to market capitalization, MTBA uses active management to raise its allocation to higher-coupon bonds and aim for higher interest income.

Returns fluctuate with changes in the US housing market's interest rate environment. In periods when rates stay high, the interest income appeal of newly issued bonds stands out.

Interest is growing among smart-income investors who expect to outperform traditional bond indexes, and inflows have appeared as a way to enhance yield within the safe-asset segment.

The product combines the stability of government-guaranteed bonds with the return potential of active management, but prepayment risk and interest rate volatility should be considered.

MBB and VMBS in the table are standard passive vehicles for gaining low-cost exposure to the US MBS market. If you want more specialized MBS management, you could consider active alternatives such as JMTG or JMBS. If you want stronger credit protection, combining the fund with a bond ETF that has a high allocation to Treasuries can also be effective.

These are the key checkpoints to review before investing in MTBA. Consider carefully whether the particularities of the US MBS market and Simplify's active management strategy fit your investment profile before deciding.

Credit risk is low thanks to government guarantees, but the fund is sensitive to interest rate changes, and shifts in the pace of prepayments driven by housing market conditions can have an unexpected effect on overall returns.

It is an active solution suited to investors who want stable income while expecting better performance than a typical MBS index. It works well as a complement that adds return potential within the defensive portion of a portfolio.