John Hancock is entering the investment-grade mortgage-backed securities (MBS) ETF arena with an actively managed product.
The John Hancock Mortgage-Backed Securities ETF (JHMB) launched Thursday on the NYSE Arca. It carries an initial expense ratio of 0.39% for one year before rising to 0.72% after waivers expire.
That eventual price point is more than twice as expensive than the 0.32% charged by the Janus Henderson Mortgage-Backed Securities ETF (JMBS), the only other active investment-grade MBS fund currently trading, and far more expensive than the 4 to 6 basis point costs associated with passive MBS funds run by BlackRock, Vanguard and State Street.
Steve Deroian, John Hancock’s head of ETF strategy, said the firm is targeting MBS as a source of income in the portfolio of Americans who are approaching or in retirement.
He said the fund managers will have access to securities issued by private banks rather than from the three federal housing finance agencies, giving the ETF access to a larger array of the $11.5 billion outstanding U.S. MBS market.
“This is an area of the market that hasn't been overflowed with active managers, and we have experience, as our management team has been in the securitized space for over a decade,” he said.