Municipal bond exchange traded funds have been drawing unusually high inflows as the fixed-income asset hovers around a supporting level.
For instance, the iShares S&P National AMT-Free Muni Bonds Fund (NYSEArca: MUB) is experiencing volume around 300,000 shares daily, whereas it has averaged 187,000 shares, according to Morningstar data. MUB has a distribution yield of 3.3%.
The fund’s top state allocations include California 22.8%, New York 17.8% and Texas 7.7%. But the ETF has 1893 holdings and the top ten components only account for 5.6% of the overall portfolio.
From a credit ratings stand point, MUB has 16.1% in AAA, 49.8% in AA, 26% in A and 5.2% in BBB.
Municipal bonds are secure, issue high yields and may generate capital gains, writes David Gillie for TheStreet.