What Is MBB? iShares MBS ETF
Last updated September 2026
Short answer
MBB is iShares MBS ETF, an ETF that tracks an index of US agency mortgage-backed securities at a 0.04% expense ratio. MBB holds mortgage-backed securities issued by Fannie Mae, Freddie Mac and Ginnie Mae: pools of US residential mortgages packaged into bonds and backed by government-sponsored entities. Credit risk is minimal because of that backing. What you are actually taking on is prepayment risk, a behaviour that has no equivalent in Treasury or corporate bonds and which is the reason mortgage bonds yield more than Treasuries of similar maturity.
MBB is issued by iShares and tracks an index of US agency mortgage-backed securities. It charges a 0.04% expense ratio, holds approximately $39.6B in assets under management, yields about 4.26%, and launched in 2007.
Prepayment risk, which is the whole story
When you own a mortgage bond, you own a claim on homeowners' payments. Homeowners can refinance whenever it suits them, and they do so precisely when rates fall.
That creates an asymmetry other bonds do not have. When rates fall, a Treasury holder enjoys a rising price; a mortgage bond holder gets their principal back early and must reinvest it at the new, lower rates. When rates rise, homeowners stay put, the bonds last longer than expected, and the holder is stuck with below-market payments for longer.
The industry term is negative convexity, and it means the fund captures less of the upside when rates fall while taking most of the downside when they rise. The extra yield over Treasuries is compensation for accepting that shape.
Why credit risk is not the concern here
These securities carry guarantees from Fannie Mae, Freddie Mac or Ginnie Mae. Ginnie Mae carries the explicit full faith and credit of the US government; the other two carry an implicit backing that was made very explicit during the 2008 crisis.
So the default question that dominates a corporate bond fund barely applies. What remains is rate risk and the prepayment behaviour above, which is a genuinely different risk profile from anything else in a typical bond allocation.
MBB holdings: top 10
Approximate weights as of August 2026. Each ticker links to its individual stock guide in Walnut.
| Rank | Ticker | Company | % of MBB |
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How do I invest in MBB?
There are three common ways to get MBB exposure. Buy shares (or fractional shares) of MBB directly at any major broker that lists it. Hold it as a core position and layer more concentrated ideas on top. Or build it into a thematic portfolio in Walnut, so MBB sits alongside other holdings that express the same thesis, with target weights you can rebalance toward. MBB trades like a stock during market hours, so you buy it the same way you would any listed share.
New to buying funds? See how to buy an ETF, step by step.
Is MBB a good buy?
Whether MBB is a good buy depends less on any single call and more on your time horizon and what you already hold: it tracks an index of US agency mortgage-backed securities, so the real question is whether you want that exposure in your mix and at what weight. We walk through valuation, concentration, and what would have to be true for it to outperform from here in is MBB a buy?
The bottom line on MBB
MBB gives you an index of US agency mortgage-backed securities exposure in one ticker at a 0.04% expense ratio. Most investors use it as a core holding and layer more concentrated thematic portfolios on top.
More on MBB
Whether MBB is worth buying today depends more on your time horizon and what you already hold than on any single call. We walk through valuation, concentration, and what would have to be true for it to outperform from here in is MBB a buy?
MBB yields 4.26% as of August 2026, paid by passing through the dividends of its underlying holdings. For the payout schedule, history, and how the distributions are taxed, see MBB dividend: yield and schedule.
New to funds like MBB? Start with what an ETF is, then how to buy an ETF, or browse the full guide to ETF investing.
Wondering how MBB fits the portfolio you already own? Walnut is an AI investing app that connects your brokerage read-only and answers questions like that about your actual holdings: overlap, concentration, and how each position tracks the S&P 500. Compare the best AI portfolio analyzers or see the best AI investing apps in 2026.
Investing in MBB with AI
Connect the broker you already use and ask Walnut's AI how MBB fits what you actually hold: what it overlaps with, what it leaves you exposed to, and how it has tracked the S&P 500. Read-only by default, and you approve anything before it reaches your broker.
FAQ
What is MBB?
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MBB is the iShares MBS ETF. It holds US agency mortgage-backed securities, which are pools of residential mortgages packaged into bonds and guaranteed by Fannie Mae, Freddie Mac or Ginnie Mae. It charges 0.04%, holds about $39.6B, distributes roughly 4.26%, and launched in 2007.
What is prepayment risk?
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Homeowners can refinance whenever they choose, and they choose to when rates fall. That returns your principal early, exactly when you can only reinvest it at lower rates. When rates rise, homeowners stay put and the bonds last longer than expected, leaving you with below-market payments. The asymmetry is the defining feature of mortgage bonds.
Why does MBB yield more than Treasuries?
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Because you are being paid to accept prepayment risk. Credit risk is minimal given the agency guarantees, so the yield premium over Treasuries of similar maturity is essentially compensation for the timing uncertainty that refinancing creates.
Are agency mortgage bonds safe from default?
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Broadly, yes. Ginnie Mae securities carry the explicit full faith and credit of the US government. Fannie Mae and Freddie Mac carry an implicit backing that was made very explicit when the government took them into conservatorship in 2008. Default is not the risk that matters in this fund.
What is negative convexity?
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It describes a bond whose price rises less when rates fall than it falls when rates rise. Mortgage bonds have this shape because falling rates trigger refinancing that caps the upside, while rising rates extend the bonds and deepen the downside. It is the technical name for the asymmetry above.
Should MBB be my only bond fund?
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It is a specialised holding rather than a core one. A broad aggregate fund already includes agency mortgage bonds alongside Treasuries and corporates. Holding MBB on its own concentrates your bond allocation in a single sector with an unusual risk profile.
How often does MBB pay?
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Monthly, matching the underlying mortgage payments, which themselves arrive monthly. The amount fluctuates more than a typical bond fund because prepayments alter the pool's composition over time.
How is MBB taxed?
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Distributions are interest income, generally taxed at ordinary rates rather than the lower qualified-dividend rates. Unlike direct Treasury interest, agency mortgage-bond income is generally not exempt from state tax. This is not tax advice.
What is MBB's expense ratio?
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MBB has an expense ratio of 0.04% per year as of August 2026, charged by iShares and deducted from the fund's value rather than billed to you separately. On a $10,000 position that is roughly $4 a year. Fees compound over time, so on a long-term holding the expense ratio is one of the few return drivers you control. It is worth comparing against other funds that track an index of US agency mortgage-backed securities before you choose.
How do I compare MBB to similar ETFs?
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Put a few fields side by side: the expense ratio (fees compound over decades), the index or strategy it tracks, the top holdings and how much they overlap with what you already own, the dividend yield, and the AUM, liquidity, and bid-ask spread that affect trading costs. For index funds, tracking error (how closely it follows its index) and tax efficiency matter too. MBB's figures are above; the full method is in Walnut's guide on how to compare ETFs.
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Walnut is informational, not investment advice. Holdings weights and fund statistics on this page are approximations stamped to August 2026; verify current figures against iShares's fund page or your broker before investing.