(GNMA) GNMA Bond - Overview

The iShares GNMA Bond ETF (NASDAQ: GNMA) is required to allocate at least 80 % of its net assets to the securities that compose its benchmark index and to “to-be-announced” (TBA) transactions whose cash-flow profiles closely match those index constituents. The index tracks fixed-rate, pass-through mortgage-backed securities (MBS) issued by the Government National Mortgage Association (GNMA) with either 15- or 30-year maturities.

As of the most recent reporting period (Q3 2024), the fund holds roughly $6.2 billion in assets, carries an expense ratio of 0.07 %, and reports a weighted-average maturity of about 12 years. Its distribution yield sits near 2.6 %, while the effective duration is approximately 5.5 years, indicating moderate sensitivity to changes in interest rates. Because GNMA securities carry an explicit U.S. government guarantee, the credit risk is minimal, but prepayment risk remains a key driver of total return.

Key economic drivers for GNMA-backed ETFs include Federal Reserve policy (which influences short-term rates and thus the discount rate applied to MBS cash flows), the health of the U.S. housing market (affecting prepayment speeds), and fiscal policy that can alter the supply of new GNMA issuances. In a rising-rate environment, the fund’s price may decline, but the guaranteed principal and interest payments can provide a floor to losses relative to non-government MBS.

For a deeper, data-rich analysis of GNMA’s risk-adjusted performance and scenario modeling, you might find ValueRay’s research tools useful.