Short muni ETFs are designed to provide income and some protection against wild vacillations in the market while the long index carries a greater interest rate risk. But for the intrepid investor, the long index and its greater risk carries with it a greater annualized yield.
The benefits of muni bond ETFs that most investors enjoy are the ability easily sell the ETF to move to another investment and the exposure to tax-exempt debt without researching individual muni credits.
Muni ETFs vary by maturity and by location. ETFs offer exposure to indexes in municipal credit from California and New York.
Among the many such ETFs available include:
- iShares S&P National Municipal Bond Fund (MUB), down 2.2% year-to-date.
- SPDR Lehman Municipal Bond (TFI), down 2.8% year-to-date