Equity: U.S. Mortgages
REM and MORT each hold a concentrated portfolio consisting solely of mortgage REITs, and for the most part look very similar to each other. In fact, the top holdings in each fund are nearly
“Both funds do a great job” identical. Both funds do a great job of representing the market.
REM charges a few bps more than MORT and doesn't track its index quite as well. However, its massive asset base and strong liquidity mean that trading should be cheap and painless. MORT is a stable fund with reasonable liquidity, and it might be preferable for long-term investors who won't be trading in and out frequently. That said, for those seeking neutral exposure to mortgage REITs at a reasonable all-in price, REM is our Analyst Pick. (Insight updated 01/23/17)
ETF.com Efficiency Insight
Both US mortgage ETFs are reasonably efficient. MORT edges out REM due to its lower expense ratio and tighter (and more consistent) tracking of its index. REM dominates in assets, but MORT
“Both US mortgage ETFs are reasonably efficient” is stable and no threat to close. (Insight updated 01/23/17)
ETF.com Tradability Insight
REM is the easy choice for investors looking for liquidity. With hundreds of thousands of shares changing hands daily, tight spreads and a perfect block liquidity score, it blows MORT out
“REM is the easy choice for investors looking for liquidity” of the water.
MORT has decent on-screen liquidity and reasonable spreads, so retail investors should be able to get in and out with relative ease. Use limit orders here and you should be fine. MORT does loose a notch in our block liquidity measure, in part due to a less-liquid underlying basket that will pose a slight obstacle to market makers. (Insight updated 01/23/17)
ETF.com Fit Insight
Both REM and MORT provide neutral exposure to the US mortgage market. REM earns a few extra points in our analysis as it tracks the same index we've chosen as a benchmark, but the
“the differences between the two funds are marginal” differences between the two funds are marginal. Ultimately, liquidity and structural concerns are likely to be the biggest differentiator here.
Both funds hold broad portfolios of mortgage REITs, but, like the industry, their portfolios are very concentrated. REM holds a few more securities than MORT, but they're similarly concentrated in their top-10 holdings—which are nearly identical between the two funds. REM and MORT also come with similarly impressive yields. (Insight updated 01/23/17)