For California exposure, the iShares California AMT-Free Muni Bond ETF (NYSEArca: CMF), SPDR Nuveen Barclays California Municipal Bond ETF (NYSEArca: CXA) and PowerShares Insured California Municipal Bond Portfolio (NYSEArca: PWZ) all largely come with heavy investment-grade AA-rated debt exposure, followed by AAA-rated and A-rated qualities.
Additionally, New York municipal bond ETFs, including the iShares New York AMT-Free Muni Bond ETF (NYSEArca: NYF), PowerShares New York AMT-Free Municipal Bond Portfolio (NYArca: PZT) and SPDR Nuveen Barclays NY Muni Bond (NYSEArca: INY), also have a similar investment-grade quality tilt.
ETF investors may also choose from diversified investment-grade muni options, including the iShares National AMT-Free Muni Bond ETF (NYSEArca: MUB) and the Market Vectors Intermediate Municipal Index ETF (NYSEArca: ITM), which weight state exposure by market-capitalization, so the states with the largest outstanding debt have the largest weight.
“Smaller municipalities may find it more difficult than larger ones to make up revenue short-falls,” Thakor said.
For more information on the munis market, visit our municipal bonds category.
Tom Lydon’s clients own shares of RVNU.