Muni ETF

Municipal Bonds ETF or simply Muni ETF are attracting much of the fixed income sector as it provides an additional incentive of tax free income. This can very well prove to be a positive contribution in an investor’s portfolio. It’s very important however that the total assets of the index Muni ETF are targeting offer strength and diversification since the possibility of the fund being close down is higher when assets are small. However this is a good option in terms of steady income.

Tough economic times and lower tax revenues can make it hard to repay investors who have investments in the Muni ETFs because of defaulting or bankruptcy. In such cases the general obligation bonds provides lesser risk. Muni ETFs are available with short term and long term maturities. Such would include Muni ETFs like SPDRS Barclays Capital Short Term Municipal Bond ETF (NYSE: SHM) and S&P Short Term National Municipal Bond ETF (NYSE:SUB) which have a short average maturity and SPDR Barclays Capital Municipal Bond ETF (NYSE:TFI) which has a maturity of almost 14 years.

Stock markets have also shown higher yields on AAA-rated general obligations Muni bonds, which is about 1.5% higher than Treasuries. The Muni Bond ETFs have a tendency to deviate back to their normal prices once the deficits are rising.

The most popular Muni ETF tracking the ETF market is the S&P National Municipal Bond Fund ETF (MUB). It has been experiencing a rising yield of 3.76% last year. it tracks the S&P National AMT-Free Municipal Bond Index and accumulative assets are of over $2 billion. There are also Muni ETFs; however that are facing a shaky fiscal situation like iShares S&P CA AMT Free Municipal Bond Fund (CMF) and Market Vectors Long Municipal Index ETF (MLN). ETFs like CMF and MLN are more vulnerable to inflations in interest rates which projects lower prices for them.

Solid returns and mending credit market have also helped a lot in attracting investors and money to the muni bond ETF market. Currently the total assets of Muni ETFs in US accumulate to more than $180.3 million. They are becoming established part of the ETF market, but investors need to weigh the risks as the rising interest rates can hurt the bond prices. That is why investing in shorter maturity bonds are often advised by economic experts.

List of Municipal Bond ETFs-

CXA – SPDR Barclays Capital California Municipal ETF

CMF – iShares S&P California Municipal ETF

GMMB – Grail McDonnell Intermediate Municipal Bond ETF

HYMB – SPDR Nuveen S&P High Yield Municipal Bond ETF

HYD – Market Vectors High Yield Municipal ETF

INY – SPDR Barclays Capital New York Municipal ETF

ITM – Market Vectors Intermediate Municipal ETF

MLN – Market Vectors Long Municipal ETF

MUAD – iShares 2015 S&P AMT-free Municipal Series

MUAE – iShares 2016 S&P AMT-free Municipal Series

MUAA – iShares 2012 S&P AMT-free Municipal Series

MUAB – iShares 2013 S&P AMT-free Municipal Series

MUAC – iShares 2014 S&P AMT-free Municipal Series

MUAF – iShares 2017 S&P AMT-free Municipal Series

MUB – iShares S&P National Municipal ETF

MUNI – PIMCO Intermediate Municipal Bond Strategy ETF

NYF – iShares S&P New York Municipal ETF

PVI – PowerShares VRDO Tax-Free Weekly ETF

PWZ – PowerShares Insured California Municipal ETF

PRB – Market Vectors Pre-Refunded Municipal ETF

PZA – PowerShares Insured National Municipal ETF

PZT – PowerShares Insured New York Municipal ETF

SMB – Market Vectors Short Municipal ETF

SHM – SPDR Barclays Capital Short Term Municipal ETF

SMMU – Pimco Short Term Municipal Bond Strategy Fund

SUB – iShares S&P Short Term National Municipal ETF

TFI – SPDR Barclays Capital Municipal ETF

ZROZ – PIMCO 25+ Year Zero Coupon U.S. Treasury Index Fund