VTEB’s will be competing with the iShares National AMT-Free Muni Bond ETF (NYSEArca: MUB), which has $5.2 billion in assets under management and also tracks the same underlying S&P National AMT-Free Municipal Bond Index. However, VTEB has a much cheaper 0.12% expense ratio, compared to MUB’s 0.25% expense ratio, which suggests that that Vanguard may be trying to compensate for the first-comer advantage with a lower fee to garner greater investment interest.
Municipal bond funds are attractive fixed-income investments because they are exempt from federal income taxes. Consequently, the muni ETFs provide enticing tax-exempt yields. For instance, MUB has a 1.74% 30-day SEC but offers a 3.07% tax equivalent 30-day SEC yield for those in the highest income bracket.
For more information on the munis market, visit our municipal bonds category.
Money managers who are looking into constructing their own ETFs may also be interested in attending the second annual ETF Boot Camp in New York next month. Whether you’re an ETF start-up, fund company, broker dealer, pension plan, endowment, private equity firm, fund board independent director, 401k plan provider or ETF industry executive…this conference is designed for you. This one-of-a-kind event will condense everything you need to know about the inner workings of the ETF business into two days.
Max Chen contributed to this article.