MTBA ETF

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.

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.

Simplify created the MTBA ETF to tackle the difficulties of investing in mortgage-backed securities during times of higher interest rates. The fund aims to offer appealing yields while minimizing credit risk by focusing on newer MBS with higher coupons and shorter durations, distinguishing it from older MBS-focused ETFs and making it a desirable choice for investors seeking income.