ALPS today launched an active ETF for investors looking to unlock the benefits of muni bonds, including reliable federally tax-free income, resilience to rising rate environments, and strong diversification benefits to balanced portfolios. 

The ALPS Intermediate Municipal Bond ETF (MNBD), listed May 20 on the NYSE with a 50 basis point expense ratio, is sub-advised by Brown Brothers Harriman & Co and employs an active, bottom-up investment approach to protect investors’ capital and generate attractive risk-adjusted returns, according to a statement from the firm.

MNBD is the third fund in ALPS’ fixed income ETF lineup and the firm’s first muni bond ETF. The other funds, which are also actively managed, include the RiverFront Dynamic Core Income ETF (RFCI) and the RiverFront Strategic Income Fund (RIGS).

“SS&C ALPS Advisors continues to deliver a robust suite of active ETF strategies for allocators and investors,” Laton Spahr, President of SS&C ALPS Advisors, said in a statement. 

“Our partner, BBH, is one of the most experienced managers in the marketplace with decades of experience actively managing municipal bonds. Their unique approach to identifying undervalued municipal securities and building diversified portfolios provides investors with tax-free income, the potential for capital appreciation, and disciplined risk management,” Spahr added.

The fund invests in a differentiated portfolio of investment-grade municipal bonds, balancing BBH’s conviction with prudent diversification. BBH’s bottom-up investment approach seeks to provide peace of mind and supplement tax-free yields with opportunities to earn excess returns. BBH utilizes independent research and a proprietary quantitative framework to assess each security’s valuation, credit, and long-term return potential in the fund. Portfolio exposures are built one bond at a time by daily adherence to these criteria, according to a statement from the firm.

“The vast diversity of the municipal bond market provides attractive opportunities for active management. However, the pronounced household ownership of municipals creates inefficiencies you don’t find in the other major bond market sectors”, Gregory Steier, Managing Director, Brown Brothers Harriman & Co, said in a statement. “We invest 100% bottom-up and seek to build a differentiated portfolio by owning a limited number of durable credits that may provide attractive yields”.

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