The $1.1 billion ITM has a 30-day SECE yield of 2.16% and an effective duration of 7.35 years. HYD has a 30-day SEC yield of 4.43% and an effective duration of 10 years. [Diversify With Cheap Muni ETFs]
In the wake of the Chicago new, Colby points out there are other major U.S. cities facing significant short falls in public pensions, including Philadelphia, Memphis, Jacksonville, Phoenix and Little Rock. Florida, Pennsylvania and Arizona combine for 13.3% of HYD’s weight.
“Where should municipal investors turn? Generally, we continue to advocate municipals because in the context of a highly diversified portfolio the credit quality is strong and the yields are the equivalent of – if not higher than- US Treasuries. For those who can manage a little credit risk, the municipal high yield market is especially attractive, with nominal yields higher than those of the U.S. Corporate high yield market, with lower overall default experience,” adds Colby.
Market Vectors High Yield Municipal Index ETF
Tom Lydon’s clients own shares of HYD.