Muni Bond ETFs Offer Potential Value Play

After the retreat in the municipal bond market, munis-related exchange traded fund valuations look more attractive and may offer investors opportunities.

Municipal bonds look more attractive than they have for some time, and the quick sell-off in munis may provide investors with a buy signal, Michael Cohick, Product Manager with VanEck told ETF Trends in a call.

Over the past three months, the iShares National AMT-Free Muni Bond ETF (NYSEArca: MUB) fell 4.0%, SPDR Nuveen Bloomberg Barclays Municipal Bond ETF (NYSEArca: TFI) dropped 4.9% and VanEck Vectors AMT-Free Intermediate Municipal Index ETF (NYSEArca: ITM) declined 5.5%.

However, some traders are venturing back into munis market, with MUB up 1.6%, TFI 0.9% higher and ITM up 1.6% over the past week.

“Very much like hitting a modern day “reset” button, the outlook ahead for the municipal market should be viewed in the light of the factual evidence, which I argue supports a return to optimism for the municipal asset class,” Jim Colby, Portfolio Manager for VanEck, said in a note. “Despite the post-election selling and volatility which has occurred broadly in fixed income, I view this tumult as a short-term market correction.”