The past week’s sell-off in municipal bonds has caused ETFs tracking the fixed-income sector to trade at steep discounts to net asset value that may provide an opportunity for bargain hunters, according to a report.
The $3.7 billion iShares National AMT-Free Muni Bond ETF (NYSEArca: MUB) is trading at its deepest discount ever to the value of its underlying portfolio, Bloomberg News reports.
MUB closed Monday at a discount of 3.4% to intraday indicative value, according to Morningstar data.
Muni bond ETFs continued to tumble Monday with the funds still trading below indicative value in the wake of last week’s rush for the exits. ETFs tracking illiquid asset classes such as muni debt can deviate away from the net asset value of the underlying market in unsettled markets. [Muni Bond ETF Sell-Off Reaches Sixth Day as Discounts Linger]
Redemptions from muni bond mutual funds have pushed yields higher, which could make the sector more attractive to income investors.