AGNC Investment Corporation AGNC maintains an active and defensive portfolio-management strategy that can support long-term growth despite elevated volatility in the mortgage market. By proactively rebalancing its portfolio and adjusting hedging strategies, the Company is attempting to minimize interest rate and prepayment risks while preserving attractive return opportunities.
The company has maintained a significant hedge position. As of March 31, 2026, AGNC had interest rate hedges covering 75% of its investment securities repo, TBA positions and other debt. Additionally, the Company reduced certain credit-focused and non-agency holdings while increasing exposure to high-coupon agency mortgage-backed securities (“MBS”). These restructuring efforts are expected to improve cash flow stability and provide better protection against prepayment uncertainty.
This strategy has already helped AGNC deal with uncertain situations. The 1Q2026 results benefited from higher average asset yields and increased net interest income (NII). AGNC’s focus on agency mortgage-backed securities continues to be a key growth driver. These securities are backed by government agencies or government-sponsored enterprises, making them relatively safe in fixed income markets. The company had an investment portfolio of $94.7 billion at the end of the first quarter, including $84.4 billion in agency MBS and $9.5 billion in net TBA securities.
However, the growth prospects are not without risks. Mortgage-spread volatility, interest rate fluctuations and unfavorable yield curves could pressure near-term performance. The company’s economic return on solid common equity was negative 1.6% in the first quarter, which suggests that hedging cannot fully protect against spread-related losses.
Nevertheless, AGNC’s disciplined portfolio management and defensive investment approach provides stability for long-term growth.
How does AGNC stack up against NLY and STWD?
AGNC is competing Annaly Capital Management only and Starwood Property Trust STWD in the mortgage REIT sector. However, each company follows a different investment strategy depending on its portfolio focus and risk-return preferences.
Annaly pursues a diversified strategy, combining traditional agency mortgage-backed securities with non-agency and credit-focused assets. While agency MBS provide protection from the downside, investing in non-agency asset classes increases return opportunities. The Company is also expanding its Mortgage Servicing Rights (“MSR”) platform through newly generated MSR acquisitions from its partner network, which is expected to support sustainable cash flows and strengthen its MSR business. As of March 31, 2026, Annaly’s investment portfolio totaled $106.7 billion.