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.

Subscribe to our free daily newsletters!
Please enter your email address to subscribe to ETF Trends' newsletters featuring latest news and educational events.