Muni Bond ETFs

The largest muni debt ETF has rallied to a record high as investors pile into the bonds on expectations tax rates will rise next year and boost the appeal of the sector’s tax-exempt status.

Demand for iShares S&P National AMT-Free Municipal Bond Fund (NYSEArca: MUB) has been strong as evidenced by the ETF trading at a premium to indicative value since July 16, the longest streak since March, Bloomberg News reports.

MUB holds $3.5 billion in assets and pays a 12-month yield of 2.9%.

“Investors are looking for ways that they can pick up yield, especially munis, which have the tax advantage on the income,” said Matthew Tucker, head of iShares fixed-income strategy, in the report. [Muni Bond ETF Rally]

Yet the muni bond rally has raised concerns the asset class has “gotten pricey and risky at the same time,” reports Jason Zweig at The Wall Street Journal.