The new municipal bond exchange traded funds (ETFs) have generated a lot of buzz lately. The subprime mortgage fiasco combined with the possibility of a Democrat as the new President could make these new ETFs an attractive investment. The Federal Reserve cut interest rates because of the subprime problems, and that action has pushed up the price of municipal bonds. In addition to high bond prices, if a Democrat were elected next year, then higher marginal tax rates could follow. Higher bond prices and higher taxes make tax-advantage investments popular, reports Jesse Emspak for Investor’s Business Daily. The new municipal bond ETFs available include:

  • SPDR Lehman Municipal Bond ETF (TFI)
  • iShares S&P National Municipal Bond Fund (MUB)

Also, Van Eck has six muni-bond ETFs in the works, and PowerShares has four in the pipeline.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.