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First Trust Mortgage Income Fund
First Trust Mortgage Income Fund, chaired by James A. Bowen, invests in agency and non-agency MBS from Wheaton, IL.
First Trust Mortgage Income Fund
The First Trust Mortgage Income Fund is a closed-end management investment company listed on the New York Stock Exchange. It invests primarily in mortgage-backed securities, a mix of residential and commercial mortgage-backed securities issued or guaranteed by U.S. government agencies like Ginnie Mae, Fannie Mae, and Freddie Mac, as well as non-agency residential and commercial mortgage-backed securities. The fund is managed by First Trust Advisors L.P., with James A. Bowen serving as Chairman of the Board of Trustees. The strategy centers on generating current income for distribution to common shareholders. The portfolio blends agency MBS, which carry explicit or implicit government guarantees, with non-agency securities that offer higher yields in exchange for credit risk. The fund may use leverage to enhance returns, a common feature among closed-end mortgage funds. Geographic exposure is concentrated in the United States, reflecting the US-centric nature of the agency MBS market and the fund's domestic incorporation. The fund reports its holdings and performance through quarterly SEC filings and monthly shareholder updates. First Trust Advisors, the fund's investment adviser, is an indirect subsidiary of First Trust Portfolios L.P. and part of a broader asset management group that sponsors unit investment trusts and exchange-traded funds. The fund's closed-end structure means it has a fixed number of shares traded on the secondary market, often at a discount or premium to net asset value. This architecture appeals to income-oriented investors who value the fund's managed distribution policy. Structurally, the fund stands apart from typical mortgage REITs by operating under the Investment Company Act of 1940, which imposes stricter diversification and leverage limits. This regulatory posture provides a layer of investor protection not found in mREIT structures. The closed-end format also distinguishes it from open-end mutual funds, as portfolio managers are not forced to sell assets to meet redemptions during market dislocations.
General information
Firm type
Asset Manager
Year founded
—
AUM
Undisclosed
Location
Region
North America
Country
United States
City
Wheaton
Corporate office
Wheaton, IL, United States
Principals
James A. Bowen
Chairman of the Board
Sector focus
Frequently asked questions
Who manages the First Trust Mortgage Income Fund's investment decisions?
First Trust Advisors L.P. serves as the fund's investment adviser and is responsible for day-to-day portfolio management. The firm's investment committee oversees strategy, with James A. Bowen chairing the Board of Trustees. Specific portfolio managers are not always individually named in public filings.
What is the difference between the First Trust Mortgage Income Fund and a mortgage REIT?
The fund is a closed-end management investment company regulated under the Investment Company Act of 1940. This imposes strict diversification requirements and caps on leverage that do not apply to mortgage REITs, which are typically structured as corporations with different tax treatment. The 1940 Act structure provides structural investor protections, including limits on affiliated transactions and asset concentration.
How does the fund generate returns for shareholders?
The fund seeks current income by investing in a mix of agency residential MBS, non-agency residential MBS, and commercial MBS. It aims to distribute this income to common shareholders through monthly payments. The fund may also use modest leverage, typically through repurchase agreements, to amplify the yield spread between its portfolio and borrowing costs.
What types of mortgage-backed securities does the fund hold?
The portfolio holds both agency MBS — pools of residential mortgages guaranteed by Ginnie Mae, Fannie Mae, or Freddie Mac — and non-agency MBS, which are issued by private financial institutions without a government guarantee. The fund also invests in commercial mortgage-backed securities (CMBS) backed by income-producing properties such as office buildings, retail centers, and apartment complexes.
Why might the shares trade at a discount to net asset value?
Closed-end funds have a fixed number of shares, so market price is driven by supply and demand rather than solely by the underlying asset value. The First Trust Mortgage Income Fund, like many income-oriented closed-end funds, has historically traded at a discount during periods of interest rate uncertainty, when investors price in the impact of higher rates on MBS valuations and the fund's cost of leverage.
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