Municipal bond ETFs offer investors decent yield and a play on improving credit quality in debt issued by states and local governments.
“The Barclays Municipal Bond Index returned 3.43% year-to-date, with an average coupon of 4.90%,” says James Colby, portfolio manager and senior municipal strategist at Van Eck Global. “This generated enough return to help investors weather momentary downturns in market value.”
Van Eck oversees several muni bond ETFs, including Market Vectors High Yield Municipal Index ETF (NYSEArca: HYD). The fund has a 30-day SEC yield of 5.22%. [Muni Bond ETFs ss Alternative to Treasuries]
HYD generated a total year-to-date return of 9.9% as of June 13, according to investment researcher Morningstar.