Understanding Mortgage Backed Security Mutual Fund Investments

Mortgage backed security mutual funds are a type of investment that can be a bit confusing, but stick with me and I'll break it down in simple terms.

They're essentially a way to pool money from many investors to buy a large number of mortgage-backed securities, which are created when a lender sells a bundle of mortgages to a third party.

This allows individual investors to diversify their portfolios and potentially earn a steady income stream from the interest payments on the underlying mortgages.

By investing in a mortgage backed security mutual fund, you're essentially buying a small piece of a large portfolio of mortgages, which can provide a predictable source of returns.

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A Mortgage Backed Security Mutual Fund is a type of investment that seeks to provide stable income and potential price appreciation.

The housing market plays a significant role in the U.S. economy, contributing around 15%-18% to annual GDP.

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These funds typically invest in residential mortgage-backed securities (RMBS), primarily agency and non-agency RMBS, which are created from 30-year fixed-rate mortgages.

The majority of these mortgages are guaranteed by one of three government agencies, making them a relatively stable investment option.

By investing in Agency MBS, a Mutual Fund can provide exposure to a major global fixed income sector.

Investing in a mortgage-backed security mutual fund can provide a relatively stable source of income, as the fund's returns are tied to the performance of the underlying mortgages, which are often less volatile than stocks.

By pooling funds from multiple investors, a mortgage-backed security mutual fund can spread risk and provide a more diversified portfolio.

Mortgage-backed securities (MBS) are typically backed by high-quality assets, such as government-guaranteed loans, which reduces the risk of default.

The returns on a mortgage-backed security mutual fund can be more predictable than those on other types of investments, as the fund's income is generated from a fixed pool of mortgages.

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Investors in a mortgage-backed security mutual fund can benefit from a relatively low correlation with other asset classes, making it a potential diversification tool for a portfolio.

This can lead to a smoother ride for investors, as the fund's performance is less likely to be heavily influenced by market fluctuations.

The management fees for a mortgage backed security mutual fund are relatively low, at 0.25% of the value of your investment each year.

These fees are used to cover the costs of managing the fund, including the salaries of the fund managers and other expenses.

You may also be subject to customary brokerage commissions when buying or selling shares of the fund in the secondary market.

Here is a breakdown of the annual fund operating expenses:

With a total annual fund operating expense of 0.17% after the fee waiver, this fund is a relatively low-cost option for investors.

Management fees can be a significant cost for investors. The annual fund operating expenses for this fund are 0.27% of the value of your investment.

The management fee alone accounts for 0.25% of the annual expenses. This fee is charged for the fund's management and administration.

Distribution and service fees, also known as 12b-1 fees, are not charged in this case, as they are 0.00%. Other expenses, such as administrative costs, make up 0.02% of the annual expenses.

A fee waiver of 0.10% is also applied, reducing the total annual fund operating expenses to 0.17%. This means that investors pay less in fees overall.

Here's a breakdown of the annual fund operating expenses:

Janus Henderson for MBS offers a unique approach to active bond asset management, focusing on security selection to achieve better risk-reward potential.

Their team has decades of experience in securitized markets, with access to a wide range of products through their single-sector and full coverage offerings.

The firm has $26.8B in securitized assets under management, a testament to their expertise and commitment to this area of investment.

Their dedicated MBS expertise is led by experienced professionals, including the Head of US Securitised Products and the Head of Structured and Quantitative Fixed Income, both of whom serve as Portfolio Managers.

These individuals, along with the Associate Portfolio Manager and Securitised Products Analyst, bring a deep understanding of the market to their work, helping to drive results for investors.

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