If You Invested in Regan Floating Rate MBS ETF (MBSF)

Regan Floating Rate MBS ETF (NYSE: MBSF) is an actively managed exchange-traded fund sponsored by Regan Capital, LLC. According to Regan Capital, MBSF invests primarily in floating rate Agency Residential Mortgage-Backed Securities (RMBS). Agency RMBS are mortgage-backed securities issued or guaranteed by U.S. government-sponsored entities, and are described by Regan Capital as typically offering higher yields than U.S. Treasury bonds while being backed by these agencies.

MBSF is positioned within the fixed income and mortgage-backed securities space as an exchange-traded fund that focuses on floating rate Agency RMBS. Regan Capital describes its ETF strategies as actively managed, meaning portfolio decisions are made on an ongoing basis rather than tracking a specific index. The firm notes that its approach in this area seeks to generate alpha from its portfolio of Agency RMBS, although there is no guarantee that any investment strategy will achieve its objectives, generate profits, or avoid losses.

Background on Regan Capital

Regan Capital, LLC is an SEC Registered Investment Adviser founded in 2011 and based in Dallas, Texas. The firm focuses on fixed income markets with an emphasis on mortgage bonds. Its target investor base includes endowments and foundations, banks and insurance companies, corporate and public pension plans, family offices, high net worth individuals, and Registered Investment Advisors. Regan Capital also manages other products in the mortgage and fixed income space, including the Regan Total Return Income Fund (RCIRX) and the Regan Fixed Rate MBS ETF (MBSX).

The launch of MBSF is described by Regan Capital as its first ETF, with a focus on floating rate Agency RMBS. The firm states that Agency RMBS are purchased on over-the-counter markets, which are typically available to investors with established relationships with primary dealers and brokers. Through the ETF structure, Regan Capital presents MBSF as a way for investors to access this segment of the mortgage-backed securities market in a listed, exchange-traded format.

Investment Focus and Risk Considerations

Regan Capital notes that MBSF invests in mortgage-backed securities issued or guaranteed by the U.S. government or one of its agencies or sponsored entities, some of which may not be backed by the full faith and credit of the U.S. government. The firm highlights that MBS investments involve risks such as interest rate risk, prepayment risk, and extension risk. It also states that mortgage-backed securities are dependent on real estate prices and real estate fundamentals, and that significant declines in real estate prices can negatively affect the value of such securities.

In its disclosures, Regan Capital emphasizes that exchange-traded fund investing involves risk and that principal loss is possible. It notes that there is no guarantee that any investment strategy will achieve its objectives, generate profits, or avoid losses. The firm also points out that ETFs can trade at a premium or discount to their net asset value, that an active secondary trading market may not develop or be maintained, and that trading may be halted by the exchange on which shares trade, all of which can affect an ETF’s ability to sell its shares.

Role Within Regan Capital’s Product Lineup

MBSF is described as part of a broader lineup of mortgage-focused strategies managed by Regan Capital. The firm launched the Regan Total Return Income Fund (RCIRX), a mutual fund that invests across the fixed income market with a focus on mortgage bonds, and later introduced the Regan Fixed Rate MBS ETF (MBSX), which invests primarily in fixed rate Agency RMBS. Within this context, MBSF represents Regan Capital’s floating rate Agency RMBS ETF, complementing the fixed rate ETF and the mutual fund that also emphasize mortgage-related securities.

Regan Capital’s disclosures stress that investors should consider the investment objective, risks, charges, and expenses of the fund before investing, and that the prospectus contains this and other important information. The firm recommends that the prospectus be read carefully before any investment decision.