The bulk of SHM’s holdings are rated AA or AAA and the ETF’s modified adjusted duration is just 2.9 years. Still, credit risk is a factor investors should consider.

“To us, the credit quality breakdown is important, giving investors an understanding of the risk incurred relative to the 0.74% 30-day SEC yield. However, in light of the situation in Puerto Rico, which currently has an investment-grade credit rating, we think investors should also understand what states and territories ETFs have exposure to. SHM’s largest exposure was to New York (18% of assets), California (9%), Texas (7%) and Maryland (6%),” said S&P Capital IQ.

S&P Capital IQ also has a marketweight rating on the iShares Short-Term National AMT-Free Muni Bond ETF (NYSEArca: SUB), which has $704.3 million in AUM. SUB has an effective duration of just two years.

California and New York issues combine for over a third of SUB’s weight.  Nearly all of SUB’s 722 holdings are rated between A- and AAA. [Muni Sell-Off is Overdone]

iShares Short-Term National AMT-Free Muni Bond ETF