ETF Trends
ETF Trends

Following the pullback in municipal bonds, muni exchange traded funds could regain traction among income-oriented investors as the Fed extends its accommodative policies.

Muni bond ETFs are beginning to see their first inflows since May, reports Eric Balchunas for Bloomberg.

The iShares National AMT-Free Muni Bond ETF (NYSEArca: MUB), which has a 2.72% 30-day SEC yield, has attracted $52.5 million in assets over the past two weeks, according to IndexUniverse data. [Muni Bond ETFs Look Attractive Compared to Treasuries]

Munis were pummeled earlier this year when rates began rising – bonds have an inverse relationship with yields, so bond prices dip as interest rates increase.

However, a period of prolonged low rates could make muni bond ETFs more attractive as an income play, especially for investors in higher tax brackets – munis essentially come with a tax-equivalent yield of about 5%.

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