LMBS vs. SMBS

Last updated Jun 4, 2026

LMBS (First Trust Low Duration Mortgage Opportunities ETF) and SMBS (Schwab Mortgage-Backed Securities ETF) are both Mortgage Backed Securities funds. LMBS is actively managed, while SMBS is passively managed. Over the past year, LMBS returned 6.09% vs 6.78% for SMBS. Their correlation of 0.80 suggests significant overlap in exposure. LMBS charges 0.68%/yr vs 0.03%/yr for SMBS.

Performance

LMBS vs. SMBS - Performance Comparison

The chart below illustrates the hypothetical performance of a $10,000 investment in First Trust Low Duration Mortgage Opportunities ETF (LMBS) and Schwab Mortgage-Backed Securities ETF (SMBS). The values are adjusted to include any dividend payments, if applicable.

Returns By Period

In the year-to-date period, LMBS achieves a 1.24% return, which is significantly higher than SMBS's 0.70% return.

LMBS

• 1D: -0.10%
• 1M: 0.11%
• YTD: 1.24%
• 6M: 1.47%
• 1Y: 6.09%
• 3Y*: 5.73%
• 5Y*: 3.03%
• 10Y*: 2.67%

SMBS

• 1D: -0.24%
• 1M: 0.33%
• YTD: 0.70%
• 6M: 0.82%
• 1Y: 6.78%
• 3Y*: —
• 5Y*: —
• 10Y*: —

*Multi-year figures are annualized to reflect compound growth (CAGR)

LMBS vs. SMBS - Yearly Performance Comparison

	2026 (YTD)	2025	2024
LMBS First Trust Low Duration Mortgage Opportunities ETF	1.24%	7.05%	0.51%
SMBS Schwab Mortgage-Backed Securities ETF	0.70%	8.15%	-0.07%

Correlation

The correlation between LMBS and SMBS is 0.81, indicating a strong positive relationship between their price movements. Combining them offers limited diversification - they tend to fall together during downturns.

	Correlation
Correlation (1Y) Calculated over the trailing 1-year period	0.81
Correlation (All Time) Calculated using the full available price history since Nov 20, 2024	0.80

The correlation between LMBS and SMBS has been stable across timeframes, ranging from 0.80 to 0.81 - a consistent structural relationship.

Return for Risk

LMBS vs. SMBS — Risk / Return Rank

Compare risk-adjusted metric ranks to identify better-performing investments over the past 12 months.

LMBS

LMBS Risk / Return Rank: 88
LMBS Sharpe Ratio Rank: 90
LMBS Sortino Ratio Rank: 93
LMBS Omega Ratio Rank: 92
LMBS Calmar Ratio Rank: 81
LMBS Martin Ratio Rank: 86

SMBS

SMBS Risk / Return Rank: 48
SMBS Sharpe Ratio Rank: 47
SMBS Sortino Ratio Rank: 49
SMBS Omega Ratio Rank: 47
SMBS Calmar Ratio Rank: 49
SMBS Martin Ratio Rank: 49

The rank (0–100) shows how this investment's returns compare to the risk taken. Higher = better. Based on the past 12 months of data, combining Sharpe, Sortino, and other metrics used by quantitative funds and institutional investors.

LMBS vs. SMBS - Risk-Adjusted Trends Comparison

This table presents a comparison of risk-adjusted performance metrics for First Trust Low Duration Mortgage Opportunities ETF (LMBS) and Schwab Mortgage-Backed Securities ETF (SMBS). Risk-adjusted metrics are performance indicators that assess an investment's returns in relation to its risk, enabling a more accurate comparison of different investment options.

	LMBS	SMBS	Difference
Sharpe ratio Return per unit of total volatility	3.10	1.64	+1.46
Sortino ratio Return per unit of downside risk	4.79	2.42	+2.37
Omega ratio Gain probability vs. loss probability	1.62	1.30	+0.32
Calmar ratio Return relative to maximum drawdown	4.28	2.41	+1.87
Martin ratio Return relative to average drawdown	18.25	8.21	+10.03
Data is calculated on a 1-year rolling basis and updated daily. The trend shows the change in the indicator over the past month.

LMBS vs. SMBS - Sharpe Ratio Comparison

The current LMBS Sharpe Ratio is 3.10, which is higher than the SMBS Sharpe Ratio of 1.64. The chart below compares the historical Sharpe Ratios of LMBS and SMBS, calculated using daily returns over the previous 12 months. A higher Sharpe Ratio indicates better risk-adjusted performance relative to the risk-free rate.

Sharpe Ratios by Period

	LMBS	SMBS	Difference
Sharpe Ratio (1Y) Calculated over the trailing 1-year period	3.10	1.64	+1.46
Sharpe Ratio (5Y) Calculated over the trailing 5-year period	1.19	—	—
Sharpe Ratio (10Y) Calculated over the trailing 10-year period	1.14	—	—
Sharpe Ratio (All Time) Calculated using the full available price history	1.13	1.18	-0.05

Drawdowns

LMBS vs. SMBS - Drawdown Comparison

The maximum LMBS drawdown since its inception was -6.49%, which is greater than SMBS's maximum drawdown of -3.20%. Use the drawdown chart below to compare losses from any high point for LMBS and SMBS.

Drawdown Indicators

	LMBS	SMBS	Difference
Max Drawdown Largest peak-to-trough decline	-6.49%	-3.20%	-3.29%
Max Drawdown (1Y) Largest decline over 1 year	-1.43%	-2.83%	+1.40%
Max Drawdown (3Y) Largest decline over 3 years	-1.72%	—	—
Max Drawdown (5Y) Largest decline over 5 years	-6.12%	—	—
Max Drawdown (10Y) Largest decline over 10 years	-6.49%	—	—
Current Drawdown Current decline from peak	-0.34%	-1.33%	+0.99%
Average Drawdown Average peak-to-trough decline	-0.80%	-0.84%	+0.04%
Ulcer Index Depth and duration of drawdowns from previous peaks	0.33%	0.83%	-0.50%

Volatility

LMBS vs. SMBS - Volatility Comparison

The current volatility for First Trust Low Duration Mortgage Opportunities ETF (LMBS) is 0.68%, while Schwab Mortgage-Backed Securities ETF (SMBS) has a volatility of 1.55%. This indicates that LMBS experiences smaller price fluctuations and is considered to be less risky than SMBS based on this measure. The chart below showcases a comparison of their rolling one-month volatility.

Volatility by Period

	LMBS	SMBS	Difference
Volatility (1M) Calculated over the trailing 1-month period	0.68%	1.55%	-0.87%
Volatility (6M) Calculated over the trailing 6-month period	1.45%	3.03%	-1.58%
Volatility (1Y) Calculated over the trailing 1-year period	1.97%	4.15%	-2.18%
Volatility (5Y) Calculated over the trailing 5-year period, annualized	2.56%	4.86%	-2.30%
Volatility (10Y) Calculated over the trailing 10-year period, annualized	2.36%	4.86%	-2.50%

LMBS vs. SMBS - Expense Ratio Comparison

LMBS has a 0.68% expense ratio, which is higher than SMBS's 0.03% expense ratio.

Dividends

LMBS vs. SMBS - Dividend Comparison

LMBS's dividend yield for the trailing twelve months is around 4.10%, less than SMBS's 5.17% yield.

Position	TTM	2025	2024	2023	2022	2021	2020	2019	2018	2017	2016	2015
LMBS First Trust Low Duration Mortgage Opportunities ETF	4.10%	4.08%	4.28%	3.96%	2.22%	2.04%	2.27%	2.55%	2.76%	2.73%	2.84%	3.03%
SMBS Schwab Mortgage-Backed Securities ETF	5.17%	4.83%	0.50%	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%

Frequently Asked Questions

Can I hold both LMBS and SMBS in my portfolio?

LMBS and SMBS have a correlation of 0.81, meaning they provide meaningful diversification benefit when combined. Depending on your allocation goals, holding both could reduce overall portfolio risk.

Which is riskier, LMBS or SMBS?

SMBS has higher volatility (1.55%) compared to LMBS (0.68%). In terms of maximum drawdown, LMBS dropped -6.49% vs SMBS's -3.20%.

Which ETF is better, LMBS or SMBS?

On 1-year performance, SMBS leads with 6.78% vs 6.09% for LMBS. On fees, SMBS is cheaper at 0.03% per year. On volatility, LMBS has been the lower-risk option at 0.68%. The better choice depends on whether you care most about return, fees, risk, or income.

Which ETF has performed better, LMBS or SMBS?

Over the 1-year period, SMBS has performed better with a 6.78% return vs 6.09%. Past performance does not guarantee future results, so compare this with risk, fees, and fund exposure.

Which ETF is cheaper, LMBS or SMBS?

SMBS is cheaper with a 0.03% expense ratio, compared with 0.68% for LMBS.

Which ETF pays a higher dividend yield, LMBS or SMBS?

SMBS has the higher dividend yield at 5.17%, compared with 4.10% for LMBS.

What is the main difference between LMBS and SMBS?

They also come from different issuers: First Trust and Charles Schwab. Their fees differ too: 0.68% for LMBS and 0.03% for SMBS.

Which has better risk-adjusted returns?

LMBS currently has the higher Sharpe Ratio (3.10 vs 1.64), meaning it's delivered slightly more return per unit of risk over the trailing 12 months. However, this ranking shifts over time - use the Risk/Return Score above for a more comprehensive view that combines Sharpe, Sortino, and other measures used by quantitative funds.