Still, state and local governments remain under pressure due to lingering deficits. Tax revenue has not been enough to offset the long term threat that has hurt budgets. Overall, however, the fears of major defaults across the country have subsided. [U.S. news Names ‘Best Fit’ ETF Rankings]

Looking ahead, if the U.S. economy fell into another recession, state and local governments would face further budget crisis. As lawmakers in Washington hash out tax cuts and reform, the breaks that investors gain from investment in muni-bonds could be at risk.

Other muni-bond ETFs include:

  • iShares S&P Short Term National AMT-Free Municipal Bond ETF (NYSEArca: SUB)
  • SPDR Barclays Capital Municipal BondETF (NYSEArca: TFI)

iShares S&P National AMT-Free Municipal Bond Fund

Tisha Guerrero contributed to this article.