All of the ETFs are insured except the National Municipal Bond ETF. Insured ETFs give investors holdings with a triple-A rating. The PowerShares municipal bond ETFs also differ from the others in that the indexes they track have a built-in five-year call protection. A call protection protects investors from having their bonds called. If a bond is called away from them it would eliminate a reliable income flow. In addition, the PowerShares muni-bond ETFs typically have a longer maturity of 20 or more years, so in general, investors will receive a little bit better of a yield compared to the others, Southland says.
Van Eck
Unfortunately, Adam Phillips, Director of Van Eck Global could not comment on the Van Eck’s municipal-bond ETFs because they are still pending approval by the SEC. The municipal-bond ETFs in registration that will track various Lehman indexes are:
- Market Vectors-Lehman Brothers Intermediate Municipal ETF
- Market Vectors-Lehman Brothers Long Municipal ETF
- Market Vectors-Lehman Brothers 1-5 Year Municipal ETF
- Market Vectors-Lehman Brothers High Yield Municipal ETF
- Market Vectors-Lehman Brothers California Municipal ETF
- Market Vectors-Lehman Brothers New York Municipal ETF
Regardless of whether municipal-bond ETFs are right for your portfolio, the main point is that when ETF providers compete, investors can win.