A colleague and customer recently lamented our lack of coverage on the Muni Bond ETP space, given what we believe is a pretty broad and consistent perspective across the Fixed Income ETP spectrum on a periodic “update” type basis. This said, today we will make the focus just that, Muni Bond ETPs.
The recent shake-up in the Fixed Income markets and an acceleration of flows lately generally in the space (we spoke about larger inflows into Intermediate Term Bond ETFs late last week ((IEF, Expense Ratio 0.15%) and UST, Expense Ratio 0.95%)) and this morning in our options recap we point out notable inflows into TBT (ProShares UltraShort 20+ Year Treasury Bond, Expense Ratio 0.95%) and call buyers in that product) has presented us with a timely opportunity to delve a bit into the Munis space which has been the recipient of some action lately as well.
MUB (iShares S&P National Municipal Bond Fund, Expense Ratio 0.25%) has pulled in about $64 million in new assets year to date and is trading at yet another new recent high today, at its highest levels since April of last year, making this now a $3.2 billion fund and the largest one in the “National Muni” ETF category.
MUB is designed to provide exposure to more than 2000 individual muni bond issues via the ETF, and advisors and investors whom are naturally attracted to muni bond investing typically are looking for tax-exempt
We see a yield of 2.94% in the ETF, which of course has been on a gradual course of declining with the rise in the ETF as of late via its underlying holdings rallying. Other notables in the National Muni ETP space include SHM (SPDR Nuveen Barclays Capital Municipal Bond, Expense Ratio 0.20%) and TFI (SPDR Nuveen Barclays Capital Municipal Bond, Expense Ratio 0.20%) which happen to be $2.1 billion and $1 billion funds respectively although none of these funds trade a ton of daily volume.
For instance MUB averages about 200,000 shares daily while SHM and TFI average about 451,000 and 270,000 shares traded daily.