mbsd

Fixed Income

Income Generation

FlexShares Disciplined Duration MBS Index Fund

For investors seeking the income diversification of mortgaged-back securities with targeted duration.

The Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the ICE BofAML® Constrained Duration US Mortgage Backed Securities Index (Underlying Index).

$20.53 (0.06%)

$20.52

0.20%

$23.38/$19.72

OBJECTIVE AND STRATEGY

2:22

Transcript
ICE BofAML Constrained Duration US Mortgage-Backed Securities Index

Diagraming the index process

Importance of Duration in MBS Portfolios

In depth discussion of the index and fund process

INDEX


The ICE BofAML® Constrained Duration US Mortgage Backed Securities Index tracks the performance of US dollar denominated 30-year, 20-year and 15-year fixed rate residential mortgage pass-through securities publicly issued by US agencies in the US domestic market. Fixed rate mortgage pools are included in the Index provided they have at least one year remaining term to final maturity and a minimum amount outstanding of at least $5 billion per generic coupon. In addition, individual production years within a generic coupon must have at least $1 billion outstanding face value to enter the index and at least $250 million outstanding face value to remain in the index. Balloon, mobile home, graduated payment and quarter coupon fixed rate mortgages are excluded from the index, as are all collateralized mortgage obligations.

Index Methodology

FlexShares Disciplined Duration MBS Index Fund (MBSD) is passively managed and uses a representative sampling strategy to track its underlying index. Use of a representative sampling strategy creates tracking risk where the Fund’s performance could vary substantially from the performance of the underlying index along with the risk of high portfolio turnover. It is subject to credit risk, which is the risk that the inability or unwillingness of an issuer or guarantor of a fixed-income security, or a counterparty to a TBA, repurchase or other transaction, to meet its payment or other financial obligations will adversely affect the value of the Fund’s investments and its returns. Changes in the credit rating of a debt security held by the Fund could have a similar effect. Debt extension risk is the risk that an issuer will exercise its right to pay principal on an obligation held by the Fund (such as a mortgage-backed security) later than expected. This may happen during a period of rising interest rates. Under these circumstances, the value of the obligation will decrease and the Fund will suffer from the inability to invest in higher yielding securities. Mortgage-backed pass-through securities risk is the risk of investing in mortgage-backed securities issued by a U.S. Agency. These securities may not be backed by the full faith and credit of the U.S. government. As interest rates rise, bond prices fall, reducing the value of fixed income investments.

The ICE BofAML Constrained Duration US Mortgage Backed Securities Index is the intellectual property (including registered trademarks) of ICE BofAML and/or its licensors ("Licensors"), which is used under license. The securities based on the Index are in no way sponsored, endorsed, sold or promoted by ICE BofAML and its Licensors and neither of the Licensors shall have any liability with respect thereto.

All data provided by: Northern Trust, J.P. Morgan, Refinitiv and Morningstar.