New ETFs Expose Investors To Mortgage-Backed Securities


If investing in the mortgage market was somewhat easier to do, would you dip a toe? If so, there are two new ETFs you should know about!

Invesco PowerShares is launching two new funds, and both focus on the mortgage market. That’s right the mortgage market.

CNBC’s Bob Pisani explains it quite well. He says:

The first ETF, the Prime Non-Agency RMBS Opportunity Fund, buys prime mortgages--mortgages for borrowers with a relatively low risk profile with a strong credit history.

The second, the Alt-A Non-Agency RMBS Opportunity Fund, would buy Alt-A loans, which are lower or alternative documentation loans made to borrowers whose risk profile falls between prime and subprime.

*In case you’re wondering RMBS stands for Residential Mortgage-Backed Securities.

We know your jaw must be on the floor. It almost seems absurd that investors would want to get into this game. But like the expression says, don’t judge a book by its cover.

Bruce Bond, President & CEO Of Invesco Powershares tells Fast Money that “economic factors have converged to push the prices of many residential backed mortgage securities below their fundamental values.” In other words, they may be cheap – unfairly punished, so to speak.

The whole concept is very new and quite intriguing. Want to hear more? Watch the video above!

Read More:

> Press Release: Invesco PowerShares Pioneers Non-Agency Mortgage-Backed Securities ETFs

> Trader Talk with Bob Pisani

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Trader disclosure: On Feb. 3rd, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE): Macke Owns (ERTS), (TM), (DIS), (MS), (SDS): Macke Owns (ERTS) Calls: Finerman's Firm Owns (DNA) & (DNA) Call Spread: Finerman's Firm Owns (MSFT), (TYC), (IBB), (XBI), (TBT): Finerman's Firm Is Short (IYR), (IJR), (IWM), (MDY), (SPY), (USO), (BBT): J. Najarian Owns (WFC) Preferred; J. Najarian Owns (BAC) Preferred; J. Najarian Owns (C) Preferred; J. Najarian Owns (FCX) & (FCX) Long Calls; J. Najarian Owns (GDX); J. Najarian Owns (JPM) Preferred; J. Najarian Owns Gold Futures; J. Najarian Owns (ISRG) Call Spread with wires