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Growth in Muni Bond ETFs Outpaces Mutual Funds: Report


Municipal bond exchange traded funds have witnessed phenomenal growth as investors use muni debt ETFs to target a greater range of desired maturities and credit exposure.

According to a Municipal Market Advisor white paper, “Municipal Exchange Traded Funds,” muni ETF asset growth has outpaced mutual funds in the first five years of its existence. [iShares: What’s Driving Muni Bond ETFs?]

Some wealthy investors are using the low-cost ETF vehicle to generate tax-exempt income.

In the period since the ETFs were first introduced in 2007, investors have enjoyed the intraday tradability associated with the ETF, especially during bouts of extreme volatility.

More recently, muni bond ETFs have garnered greater attention in the so-called fiscal cliff as investors looked at the tax-exempt status in the face of federal tax hikes.

In addition, due to the ETF structure, investors know exactly what they own as anyone can look at up-to-date component holdings on a daily basis.

However, the new fund structure has forced investors to become more educated with the ETF investment vehicle due to unique characteristics like intraday price volatility.

To download the Municipal Market Advisors’ full report on Municipal Exchange Traded Funds, click here.

Advisors who are interested in more information on municipal bond ETFs can attend the Webcast slated for 2:00PM ET Today, April 25, with guest speakers Michael Hoover, President/Chair, Investment Committee, Caprin; Jim Colby, Senior Municipal Strategist & Portfolio Manager, Market Vectors ETFs; and Tom Doe, CEO & Founder, Municipal Market Advisors.

For more information on munis, visit our municipal bonds category.

Max Chen contributed to this article.