Commercial mortgage-backed securities have much less prepayment risk, so they are less volatile.

Still, Ginnie Mae share prices can slip because of "prepayment risk."

The prepayment risk also makes Ginnie Mae funds tricky to analyze.

Instead, all the prepayment risk is concentrated in the fifth tranche, $240 million.

Given these cautions, investors may want to look for ways to hedge the prepayment risk.

The lower the rates, the less the prepayment risk.

This prepayment risk is magnified in an interest-only security.

Or, if the market views the prepayment risk as rising, prices may fall for all mortgage-backed bonds, particularly those with higher yields.

Slowly rising interest rates are ideal for government mortgage funds because prepayment risk is minimized.

Risks include interest rate, term modification, and prepayment risk.