Eaton Vance’s municipal bond ETF may be well positioned as investors look to de-risk their portfolios to fit the current economic environment.
With uncertainty dominating the macro outlook for the coming year, many investors are pumping the brakes on riskier assets. As municipal yields are currently the highest they’ve been in over a decade, investors can find compelling opportunities in today’s muni market.
The Eaton Vance Intermediate Municipal Income ETF (EVIM) is an opportunity to consider as it offers the benefits of skilled active management and decades of municipal bond market experience in a cost efficient ETF wrapper.
EVIM offers diversified core exposure to the municipal bond market, spanning municipal sectors, states and credit tiers. The fund seeks to generate income exempt from regular federal income tax.
“Many advisors are gaining comfort in have core municipal bond exposure using ETFs,” Todd Rosenbluth, head of research at VettaFi, said. “Intermediate term bonds can benefit if the Fed indeed cuts interest rates during 2024 but help limit portfolio risks.”
Under the Hood of Eaton Vance’s Intermediate Municipal Bond ETF
EVIM holds 59 securities, which have an average duration of 5.76 years. Nearly 18% of the fund by weight is in securities with a maturity of less than one year. Around 8.5% of the fund is in maturities of one to three years and over 6% is in three to five year maturities.
Furthermore, five to 10 year and 10 to 20 year maturities make up the largest composition of the fund, comprising nearly 25% and 40%, respectively, by weight. Finally, securities with maturities of 20 to 30 years make up just 2.7% of the fund by weight.
See more: “Why Ultrashort Debt ETFs Make Sense Right Now”
The fund’s top sector exposures by weight as of January 31 include special tax revenue (14.14%), hospital (13.15%), transportation (13.11%), electric utilities (13.10%), as well as general obligations (12.82%), according to the fund’s website.
The fund also holds securities that offer exposure to the water and sewer (5.92%), industrial development revenue (4.69%), education (3.24%), bond bank (3.08%), other revenue (8.82%), and other sectors (5.40%), according to the fund’s website.
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