“The recent rise in yields coupled with any additional increase that may come from typical June challenges may result in an opportunity for municipal bond investors…,” Anthony Valeri, market strategist at LPL Financial, said in the article. “We believe high-quality intermediate to longer-term maturity bonds suffered the brunt of recent weakness, were inordinately punished, and, in our view, may stand to benefit most from seasonal strength. Both segments possess more attractive valuations relative to short-term bonds and would benefit more from any subsequent decline in yields.”
Additionally, James Colby, portfolio manager and senior municipal strategist at Market Vectors, also reminds investors that muni bonds offer attractive taxable equivalent yields. For instance, Colby calculates that an investor in the 39.6% income bracket may earn a taxable equivalent yield on munis of as high as 3.63%. [Muni Bond ETFs: For What It’s Worth]
The iShares National AMT-Free Muni Bond ETF (NYSEArca: MUB) has declined 3.3% over the past month. The ETF is now trading near its 52-week low. MUB has a 1.92% 30-day SEC yield.
Some other muni bond ETFs include:
- SPDR Nuveen Barclays Capital Municipal Bond ETF (NYSEArca: TFI): 2.0% 30-day SEC yield.
- PowerShares Insured National Municipal Bond Portfolio (NYSEArca: PZA): 3.2% 30-day SEC yield.
Investors can also consider short-term muni ETFs, including:
- SPDR Nuveen Barclays Capital Short Term Municipal Bond ETF (NYSEArca: SHM): 0.45% 30-day SEC yield.
- iShares S&P Short Trm National Muni Bond (NYSEArca: SUB): 0.27% 30-day SEC yield.
- Market Vectors Short Municipal Index ETF (NYSEArca: SMB): 0.93% 30-day SEC yield.
For more information on munis, visit our municipal bonds category.
Max Chen contributed to this article.