113.41 0.00 (0.00%)
After hours: 4:30PM EDT
|Bid||113.41 x 1800|
|Ask||113.42 x 800|
|Day's Range||113.30 - 113.44|
|52 Week Range||106.42 - 113.46|
|PE Ratio (TTM)||N/A|
|Beta (3Y Monthly)||0.95|
|Expense Ratio (net)||0.07%|
Investing in municipal bonds is a good way to preserve capital while generating gradual interest. Another way to look at investing in municipal bonds, often called munis, is that you will be helping build infrastructure in your local area. There are two types of muni bonds.
The municipal bond space represents a specific corner of the bond market that has its own nuances to be wary of, such as costs and tracking errors. During the month of May, investors were willing to take on the risk as more funds were piled into even riskier high yield munis. Furthermore, municipal bond funds took in $37 billion, which was the most in almost 30 years.
With major U.S. and Asian stock indexes bleeding on escalating Sino-US trade war tensions, let's see whether it is the right time to switch to bond ETFs.
As trade war fears racked U.S. equities the past week, a move to safe-haven assets was abound, which benefited fixed income securities and bond-focused exchange-traded funds (ETFs). While investors can get core exposure via broad-based bond funds, they shouldn't forget to add municipal bonds (munis) as part of their fixed income strategy.
Limitation on the deductibility of state and local taxes (the SALT deduction) from federal taxes and limited supply are favoring muni ETFs.
Anyone looking to tamp down their tax bill for next year need look no further than municipal bonds. They've been around for decades, but many people still aren't familiar with this particular debt investment - as well as the municipal bond funds that hold them.Municipal bonds deliver tax-advantaged income to investors at regular intervals. At a minimum, muni bond income is exempt from federal tax. Depending on where you live and where the bonds are issued, that income also might be clear of state and even local taxes.If you're a high-income earner, munis are for you, says Jim Barnes, Director of Fixed Income at Bryn Mawr Trust. "The primary way to determine whether muni bonds are a good or bad investment for an investor boils down to the investor's marginal tax rate. A high marginal tax rate equates to a higher taxable equivalent yield when comparing different investment options," he says. "The higher the marginal tax rate, the more appealing and advantageous the tax-free income becomes to the investor."Just how powerful is this tax exemption? For a household earning $200,000 per year (married, filing jointly, taxed at 24%), a municipal bond yielding 4% has a tax-equivalent yield of 5.26%. That means a $100,000 investment in munis will generate roughly $1,260 more annually in passive income than they'd get with a 4% yield from, say, corporate bonds or stocks.Here are nine municipal bond funds that provide exposure to this tax-free income. There's something for every type of fund preference: mutual funds, exchange-traded funds (ETFs) and closed-end funds (CEFs). SEE ALSO: The 7 Best Bond Funds for Retirement Savers in 2019
With tax time here, some investors may want to consider revisiting municipal bonds and ETFs, such as the iShares National Muni Bond ETF (NYSEArca: MUB), in search of some tax advantages. MUB seeks to track ...
For those in or near retirement, the name of the game comes down to one thing -- income. Being able to turn your savings into a steady stream of paychecks after you stop working is really the only thing that matters. Luckily, the boom in exchange-traded funds (ETFs) to buy can provide investors with a great way to do just that.One of the best things about ETFs is that they have democratized a ton of different asset classes and bond varieties. In doing this, investors looking for income can find and build a portfolio for whatever demands they have. Income in retirement can be dynamic, featuring high initial yields, inflation protection, grow over time, etc. And investors can do it with single-ticker access and low-costs.In the end, the best ETFs make building a complete income portfolio a breeze and can help turn savings into a steady paycheck once you punch your last clock. All in all, they are a must-have for those in- or near retirement.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Small-Cap Stocks That Make the Grade But what are the best ETFs for investors to focus on? Here are five funds that can be used to build a complete income portfolio and remove the hassle. Best ETFs to Buy: SPDR Portfolio Aggregate Bond ETF (SPAB)Expense Ratio: 0.04% or $4 per $10,000 invested annually 12-Month Dividend Yield: 3%There's a reason why bonds are called fixed-income investments. Their stability and regular coupon payments make them an ideal base from which an income portfolio can be built. And ETFs make adding this base very simple and cost-effective for retirees.The Bloomberg Barclays U.S. Aggregate Bond Index is the benchmark for the broad bond universe and provides broad exposure to the U.S. investment grade bond universe. This includes everything from Treasury bonds, corporate bonds and mortgage pass-through securities to commercial mortgage-backed securities and asset-backed securities. As the top dog index for bonds, there is a wide variety of income ETFs that track it.But the SPDR Portfolio Aggregate Bond ETF (NYSEARCA:SPAB) may be one of the best.State Street finally got serious a few years ago about competing with the other two big dogs in the ETF world and created its own core line-up of ETFs. This includes the $3.7 billion SPAB. The fund provides exposure to all 4,855 bonds in the index and it does so at a rock-bottom expense ratio of just 0.04%. That low expense ratio allows income seekers to keep more of their bond's distribution payments- currently at 3.17% -- and provides better overall returns. And with free trading available at several discount brokers, using SPAB as core income position only gets better.By using SPAB as their core bond position, investors can gain exactly benefits ETFs were designed to provide. Vanguard Dividend Appreciation Index ETF (VIG)Source: Shutterstock Expense Ratio: 0.08% Dividend Yield: 2%Getting dividends from stocks provides something that bonds can't compete with -- the ability to grow their income potential. As cash flows and earnings increase, stocks tend to hand out more money back to shareholders. Historically, stocks have on average grown their dividends by about 5.1% per year. For retirees, this growth is critical in making sure their purchasing power keeps up with inflation.Tapping into this is the Vanguard Dividend Appreciation Index ETF (NYSEARCA:VIG).VIG's M.O. isn't about an initial high-yield -- it currently only pays 2% -- but growing that payout over time. The ETF looks at stocks that have a history of increasing dividends for at least 10 consecutive years. These "dividend achievers" are exactly what investors are looking or in order to make sure their income keeps up with inflation.The ETF tracks currently 180 top stocks, including Microsoft (NASDAQ:MSFT) and Nike (NYSE:NKE). VIG, however, does not include real estate investment trusts (REITs) or MLPs. As a result, the vast bulk of its distributions are considered "qualified dividends" for tax purposes. And as a Vanguard ETF, VIG's expenses are dirt cheap. The nearly $33 billion ETF only charges a measly 0.08% in expenses. * 15 Stocks That May Be Hurt by This Year's Big IPOs When it comes to income ETFs, VIG can play a powerful role in getting some serious and growing equity income. iShares Cohen & Steers REIT ETF (ICF)Expense Ratio: 0.34% Dividend Yield: 2.9%Speaking of those real estate investment trusts (REITs) that previously mentioned VIG avoids, they have long been a great way to boost the income generated from a portfolio. That's because REITs feature a special tax structure that allows them to push out much of their cash flows to investors. Those cash flows are driven by the rents and profits from the underlying properties they own. So as apartments, office buildings, and strip malls keep churning out rent growth, REITs' dividends rise.The same could be said for REIT ETFs like the top-notch iShares Cohen & Steers REIT ETF (NYSEArca:ICF).What makes ICF a particularly great ETF for retirees/income seekers is that ICF focus on the so-called "realty majors." Top holdings such as Public Storage (NYSE:PSA) or Equitable Residential (NYSE:EQR) are some of the leading firms specializing in their respective property types. With ICF, investors get exposure to the largest 30 REITs in the country.For income seekers, that's a place to be. For one thing, these firms' large asset bases provide plenty of cash flow and dividend stability. What it really means is a steady dividend in good times and bad. Moreover, REITs like ICF's holdings have long been able to raise their payouts at rates faster than inflation. This can provide a boost to income over time as well.With ICF added to your income ETFs, investors can add some serious current income and future dividend growth. Invesco Senior Loan ETF (BKLN)Source: Shutterstock Expense Ratio: 0.65% Distribution Yield: 4.5%Junk or high-yield bonds are a great way to score more income by moving down the credit ladder. The only problem is that junk bonds are very susceptible to interest rate hikes. And with the Federal Reserve starting to raise rates, income seekers looking to boost their incomes are facing a quandary.But here again, income ETFs can come to the rescue for a complete income portfolio.Senior bank loans are pools of corporate-issued debt that adjust rates every 30 to 90 days. The benefit of this is that as the Fed raises rates, those increases will be reflected in bank loan's coupons. The kicker is that senior loans are often issued to companies with credit ratings below investment grade. This means they offer higher starting yields than Treasury bonds. Investors get their cake and get to eat it as well.ETFs like the Invesco Senior Loan ETF (NYSEARCA:BKLN) make adding the once-hard-to-obtain asset class easy. BKLN is the largest of the ETFs in the sector and tracks the S&P/LSTA U.S. Leveraged Loan 100 Index. This index is designed to match the performance of the largest institutional leveraged loans based on market weighting, spreads, and interest payments. All in all, BKLN holds more than 118 different loans with top holdings including debt from PetSmart and Burger King. * 15 Stocks Sitting on Huge Piles of Cash With a yield of 4.5%, BKLN can add the extra oomph that income seekers need to build out their income portfolios and shows how the best ETFs can make adding exotic assets classes easy. iShares National Muni Bond ETF (MUB)Expense Ratio: 0.07% Distribution Yield: 2.5%One of the biggest headaches in managing an income portfolio is taxes. We all know the saying about death and taxes. Uncle Sam has to have his share. Lowering how much you hand over to him is very important- especially so in retirement. So, if you can pay him nothing, even better for you. That's why municipal bonds and muni ETFs are powerful tax fighting tools. Issued by local and state governments, municipal bonds are free from federal taxes and in many cases, state taxes.When it comes to ETFs, the $11.8 billion iShares National Muni Bond ETF (NYSEARCA:MUB) is the king of the muni castle.MUB's holds a whopping 3,703 tax-free muni bonds. That's an amazing amount of diversification for just only 0.07% in expenses. It also provides plenty of tax-free income firepower. The ETF currently yields 2.5%. That's not too shabby already and is about the same as previously mentioned SPAB. But that yield gets even more impressive when you factor in taxes. For someone in the highest bracket, they would have to earn more than 5.20% to get the same amount of income.And that is where munis shine. By using MUB in a taxable account, income seekers can build a tax-free base of income to supplement or support the other income ETFs on this list. For retirees, municipal bonds are a must-have investment when building their income streams.At the Time of writing, Aaron Levitt did not have a position in any of the ETFs or stocks mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 5 of the Best Stocks to Buy Under $10 * 7 Single-Digit P/E Stocks With Massive Upside * 7 Best Quantum Computing Stocks Trading Today Compare Brokers The post The 5 Best ETFs to Buy for a Complete Income Portfolio appeared first on InvestorPlace.
Municipal bonds are a specific corner of the bond market that has its own nuances to be wary of, such as costs and tracking errors, but this pair of ETFs eliminates the guess work involved--the Vanguard Tax-Exempt Bond ETF (VTEB) and iShares National Muni Bond ETF (MUB) . With bond market mavens warning investors of headwinds in the fixed income space like the possibility of an inverted yield curve, rising rates and BBB debt sliding out of investment-grade, investors need to be keen on where to look for opportunities. One area is within the municipal bond space, which may have gotten a boost following last November’s midterm elections.
Some markets or market segments are easier to index than others. Nonstandard assets that are difficult to trade, like municipal bonds, can be difficult to index. Indeed, running an index-tracking municipal bond fund is a tricky proposition.
Historically, gaining access to municipal bonds through an index strategy has been difficult because the muni bond market is much more fragmented and expensive to trade than other fixed-income markets. An index-tracking fund like Vanguard Tax-Exempt Bond ETF VTEB now features exceptionally low tracking error, making it a solid choice for exposure to the broader municipal-bond market. VTEB offers broad exposure to investment-grade municipal bonds and is one of the cheapest funds in the muni national intermediate Morningstar Category, earning a Morningstar Analyst Rating of Silver.
President Trump's tax law limiting state and local tax deductions may benefit the municipal bond market as taxpayers seek to ease their higher tax burden.
2018 was not a particularly good year for any type of investor, but 2019 is setting up to be a good one for income seekers. This fund has very little volatility (cash substitutes shouldn't) and it has an indicated yield of about 2.1%. While we aren't going to satisfy all our income needs with these assets, it allows us to be a little more conservative as a whole without giving up much income on the portfolio level -- which is exactly what we want in our income portfolio.
According to the latest report from State Street Global Advisors, fixed-income exchange-traded funds (ETFs) took in $16.2 billion during a tumultuous December that saw the Dow Jones Industrial Average ...
In terms of pie, Christmas dinner tables can feature some of the most scrumptious offerings–pumpkin, pecan, chocolate cream, apple, cherry, and muni? U.S. municipal bonds represent a $3.8 trillion slice ...
Rising interest rates have been somewhat of a thorn in the side of municipal bond investors this year, but some market observers believe that overall, the asset class is on solid footing. That could bode ...
Infrastructure spending—it’s one of the few things, if any, that Democrats and Republicans can agree on, but with the newly-divided Congress, can this fuel municipal bonds exchange-traded funds (ETFs) ...
There is no doubt about it: when it comes to exchange-traded funds (ETFs), advisors and investors love the low-fee products. For several years, the top funds in terms of new assets added are low-fee ETFs. That trend is continuing in 2018.
Ten-year Treasury yields pulled back a bit Thursday, but yields on benchmark government debt hover above 3.10 percent and are up nearly 17 percent year to date, enough to spark a wave of recent outflows from some well-known exchange traded funds (ETFs) spanning multiple asset classes.
Having an income stream the IRS can’t touch may sound like pie in the sky, but it’s a reality if you hold municipal bonds. If you’re in the highest tax bracket (37%) and you get a 6%-yielding municipal bond fund, that income is the exact same as a 9.5% dividend from stocks. There’s just one problem — iShares National Muni Bond ETF yields a paltry 2.4%.