Agency MBS ETFs purchase mortage-backed securities that are sponsored by government agencies like the Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage (Freddie Mac). Agency MBS ETFs often purchase mortage-backed securities from banks, who sell a large percentage of their active mortgages on the secondary mortage market. Mortage-backed securities are often grouped into pools based on common features, a process known as securitization. Agency MBS ETFs make either semi-annual or monthly interest payments to investors.
