Securities - Buy Mortgage Backed

Funds like the iShares MBS ETF (MBB) provide diversified exposure to thousands of mortgages. Best for retail investors.

: They provide exposure to the housing market and typically have a low correlation with corporate bonds or stocks. Critical Risks to Consider

: Agency MBS often offer more attractive yields than U.S. government bonds while maintaining high credit quality.

Mortgage-backed securities (MBS) are fixed-income investments formed by pooling home loans and selling shares of that pool to investors. When homeowners make monthly mortgage payments, both the interest and principal are passed through to the MBS holder. For individual investors in 2026, the market offers a way to earn passive monthly income with generally higher yields than U.S. Treasuries, though with unique risks like prepayment. Core Investment Benefits

: Unlike typical bonds that pay semi-annually, MBS provide monthly payouts derived from mortgage payments.

Professional managers select a portfolio of pass-through securities. Widely available via brokerage accounts. Buying individual MBS (by CUSIP) through a broker. Harder for retail; high minimums often apply. Major Types of MBS

: Conversely, when rates rise, homeowners stop refinancing, which can lock investors into lower-yielding securities for longer than anticipated.