MTGP
Mortgage Plus Bond Fund
Trump Administration’s Plan to Buy Agency MBS: How to Play It?
Published February 4, 2026
Kevin Flanagan
Head of Investment and Fixed Income Strategy
Key Takeaways
- Active management can unlock hidden value in mortgage-backed securities by allowing skilled managers to selectively add yield and manage risk more effectively than passive strategies.
- Headlines of the Trump Administration’s plan to buy agency MBS, housing affordability challenges and prepayment risks are reshaping the mortgage market, and active strategies help investors better navigate today’s evolving macro and credit landscape.
- The collaboration between WisdomTree and Voya brings deep securitized credit expertise to ETFs, supporting more precise portfolio construction through the actively managed WisdomTree Mortgage Plus Bond Fund (MTGP).
Why Mortgage-Backed Securities Demand a New Approach
With inflation retreating and the Fed pausing its hiking cycle, fixed income markets are attracting renewed investor attention. Recent headlines regarding the Trump Administration’s plan to buy $200 billion in agency mortgage-backed securities (MBS) has created relative opportunities in the fixed income securitized arena. In the MBS space, challenges such as housing affordability, credit dispersion and shifting prepayment dynamics are also reshaping the opportunity set.
In this environment, passive exposure can miss crucial nuances, particularly in the securitized corners of the market.
Active Plus: A Smarter Way to Access MBS
The mortgage-backed space is rife with dispersion. Not all mortgage-backed bonds are created equally. Active managers can exploit dislocations between agency and non-agency MBS, while managing duration and convexity risks more precisely.
An Active Plus approach blends index-like core exposure with alpha-seeking satellite positions. This allows for a more tailored experience, mitigating volatility, enhancing carry and improving credit positioning versus static benchmarks.
In the current environment, it is critical to lean into managers who know how to ‘pick their spots’ in securitized credit. With the Fed potentially shifting course and mortgage rates still elevated, credit selection becomes paramount.
The Role of Mortgage-Backed ETFs in Today’s Portfolio
Mortgage-backed securities remain a core building block in diversified bond portfolios. With volatility in rates and housing markets still high, the construction of that exposure matters more than ever.
ETFs that incorporate active securitized management offer transparency, liquidity, and cost efficiency, with the added benefit of professional credit selection. For investors seeking enhanced yield without dramatically increasing risk, this could be an ideal way to express views in the MBS sector.
Strategy in Focus
WisdomTree’s collaboration with Voya Investment Management reflects the strategy behind the WisdomTree Mortgage Plus Bond Fund (MTGP).
This actively managed ETF seeks to outperform the Bloomberg US MBS Index by integrating Voya’s expertise in security selection and relative value positioning, especially in non-agency and structured credit segments.
Conclusion: A Timely Evolution in Mortgage-Backed Investing
In today's complex fixed income environment, "owning the index" may not be enough. Active Plus strategies, especially those with deep expertise in securitized credit, can offer a smarter, more responsive way to capture mortgage-backed opportunities.
Investors looking to build resilience and income in their portfolios may find that now is the right time to reconsider how they access the MBS market.
Important Risks Related to this Article
There are risks associated with investing, including possible loss of principal. Fixed income investments are subject to interest rate risk; their value will normally decline as interest rates rise. In addition, when interest rates fall, income may decline. Fixed income investments are also subject to credit risk, the risk that the issuer of an investment will fail to pay interest and principal in a timely manner, or that negative perceptions of the issuer’s ability to make such payments will cause the price of that investment to decline. Investing in mortgage- and asset-backed securities involves interest rate, credit, valuation, extension and liquidity risks and the risk that payments on the underlying assets are delayed, prepaid, subordinated or defaulted on. Liquidity risk may result from the lack of an active market, reduced number and capacity of traditional market participants to make a market in fixed income securities, and may be magnified in a rising interest rate environment and/or with respect to particular types of securities, such as securitized credit securities. Non-agency and other securitized debt are subject to heightened risks as compared to agency-backed securities. High yield or “junk” bonds have lower credit ratings and involve a greater risk to principal. Derivative investments can be volatile and these investments may be less liquid than other securities, and more sensitive to the effects of varied economic conditions. Due to the investment strategy of the Fund, it may make higher capital gain distributions than other ETFs. Please read the Fund’s prospectus for specific details regarding the Fund’s risk profile.
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About the contributor
Kevin Flanagan
Head of Investment and Fixed Income Strategy
Kevin serves as the Head of Investment and Fixed Income Strategy. In this role, he writes macro and fixed income-related content and works closely with the sales, research and marketing teams. In addition, Kevin conducts client-facing webinars and meetings, providing expertise on WisdomTree’s existing and future bond ETFs. Prior to joining WisdomTree, Kevin spent 30 years at Morgan Stanley, where he was Managing Director and Chief Fixed Income Strategist for Wealth Management. He was responsible for tactical and strategic recommendations and created asset allocation models for fixed income securities. He was a contributor to the Morgan Stanley Wealth Management Global Investment Committee, primary author of Morgan Stanley Wealth Management’s monthly and weekly fixed income publications, and collaborated with the firm’s Research and Consulting Group Divisions to build ETF and fund manager asset allocation models. Kevin has an MBA from Pace University’s Lubin Graduate School of Business, and a B.S. in Finance from Fairfield University.