Muni ETF Trading at Discount as Investors Fret Rates, Detroit | ETF Trends

The iShares National AMT-Free Muni Bond ETF (NYSEArca: MUB) has been trading at a discount to its underlying holdings for a record-long period as muni investors continue to worry about the potential impact of rising interest rates and fallout from Detroit’s recent bankruptcy filing.

MUB, the largest ETF in the category with $3.2 billion of assets, has been trading at a discount to its net asset value for 60 consecutive days, Bloomberg News reported Thursday.

The muni bond ETF saw a 1% discount to intraday indicative value on Thursday morning, according to Morningstar. [iShares: Munis, Michigan and the Consequence of Choice]

Bart Mosley, co-president of Trident Municipal Research, told Bloomberg the current discount may persist for the next few weeks, reflecting concern that interest rates will rise further if the Federal Reserve cuts its bond purchases. [Bond ETFs and Illiquid Markets]