ETF investors have kept piling into munis, despite the pricey valuations. Year-to-date, MUB has attracted $155.7 million in net inflows, TFI added $79.0 million, ITM saw $21.7 million in inflows and VTEB brought in $61.5 million, according to ETF.com.
Money managers aren’t letting up either. BlackRock Inc., Nuveen Asset Management and Vanguard Group Inc., which make up a combined 10% of the $3.7 trillion municipal market, plan to keep acquiring muni positions and avoid betting on the direction of interest rate moves.
“Calling rates is not easy — you have a flight to quality going on, and trying to call that turning point is oftentimes difficult,” Chris Alwine, head of muni funds at Vanguard, told Bloomberg. “That’s really the debate going on in munis right now: You’re dealing with macro forces that are forcing rates lower, and then muni factors indicate there’s some vulnerability in the market. When we put that all together, we’re positioned more neutrally.”
Max Chen contributed to this article.