DoubleLine Mortgage ETF (DMBS) seeks to provide income and total return by investing primarily in mortgage-backed securities and other mortgage-related investments. This actively managed fixed-income ETF focuses on residential and commercial mortgage securities, including agency and non-agency mortgage-backed securities across the credit spectrum.
How It Works
DMBS employs an actively managed approach led by DoubleLine's mortgage specialists who analyze credit quality, prepayment risk, and interest rate sensitivity. The fund invests in agency MBS (government-backed), non-agency MBS, commercial mortgage-backed securities, and mortgage REITs. Portfolio managers adjust duration, credit exposure, and sector allocation based on market conditions. Holdings typically range from 50-200 positions with quarterly rebalancing to optimize risk-adjusted returns.
Key Features
- Managed by DoubleLine's experienced mortgage team with specialized expertise in credit analysis and prepayment modeling across mortgage sectors
- Offers 4.12% dividend yield through diversified mortgage income streams including agency MBS, non-agency securities, and commercial mortgages
- Recently launched in April 2023, providing access to DoubleLine's institutional mortgage strategies in ETF format with daily liquidity
Risks
- This ETF can lose value when interest rates rise, as mortgage securities are highly sensitive to rate changes and may decline 5-15% during rapid rate increases
- Credit risk from non-agency mortgage holdings could cause losses if housing markets deteriorate or borrower defaults increase significantly during economic downturns
- Prepayment risk occurs when homeowners refinance mortgages early, forcing reinvestment at potentially lower yields and reducing expected income streams over time
Who Should Own This
Best suited for income-focused investors with medium risk tolerance seeking mortgage sector exposure as a satellite holding (5-15% of fixed-income allocation). Requires 2-3 year minimum time horizon due to interest rate sensitivity. Appropriate for investors comfortable with credit risk who want professional mortgage management and higher yield potential than Treasury bonds.