By Todd Shriber via Iris.xyz

Municipal bonds, debt issued by cities, municipalities and states to fund day-to-day spending as well as major capital projects, such as airports, roads, highways and stadiums, are beloved by scores of income investors.

Investors’ affinity for municipal bonds stems from the often docile nature of this asset class, low-risk income streams and tax advantages. The current climate for riskier assets, such as equities and high-yield debt, is proving conducive for municipal bonds. As an actively managed fund, the JPMorgan Municipal ETF (JMUB) can help investors access some of the more compelling opportunities in the municipal market.

Traditional passive municipal bond strategies can subject investors to unwanted duration risk. Additionally, index-based municipal bonds often hold massive numbers of bonds. That is good from a diversification perspective, but it also means the strategy is not focusing on the best opportunities. The S&P National AMT-Free Municipal Bond Index is home to over 3,700 municipal bonds, none of which command weights of even 0.50 percent.

Conversely, the the JPMorgan Municipal ETF (JMUB) looks for intermediate-term exposure while identifying munis with the potential to perform well over a variety of market cycles.

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