State Street Debuts Nuveen Managed Muni ETF

Today, State Street Global Advisors extended its partnership with Nuveen to launch another ETF focused on the municipal bond space. The SPDR Nuveen Municipal Bond ETF (MBND) is unique from the other products stemming from the partnership in that it is actively managed, with Nuveen managing the portfolio.

MBND comes with an expense ratio of 0.40% and lists on Cboe Global Markets, the parent company of ETF.com.

The Fund

“There may be a lot of actively managed muni funds, but there’s not one that’s managed by Nuveen,” said Susan Thompson, SPDR Americas head of distribution. “They’ve got really fantastic capabilities from a credit analysis standpoint.”

MBND will mainly draw its holdings from the Bloomberg Barclays 3-15 Year Blend (2-17) Municipal Bond Index, which covers investment-grade debt with two to 17 years of maturity remaining. The portfolio can hold a wide variety of types of municipal debt from a variety of entities, from states and territories drilling down to counties and districts, according to the fund’s prospectus.

The fund can invest in holding of any credit quality but limits its junk bond exposure to no more than 20% of the portfolio. It aims for a weighted average duration of 4.5-7 years and a weighted average maturity between five and 12 years. The fund benchmark guides the portfolio exposure, with individual securities weighted within 5% of their weight in the index and sectors deviating by no more than 10%, the document says.

The other ETFs resulting from the State Street and Nuveen partnership include three index-based funds: the $4.5 billion SPDR Nuveen Bloomberg Barclays Short Term Municipal Bond ETF (SHM), the $3.5 billion SPDR Nuveen Bloomberg Barclays Municipal Bond ETF (TFI) and the $1.5 billion SPDR Nuveen Bloomberg Barclays High Yield Municipal Bond ETF (HYMB).

“As we’ve been talking to advisors, they’ve been pretty vocal that they want to combine index and active in many asset classes, particularly on the fixed income side. If anything, advisors feel more comfortable going active in fixed income than in any other space—particularly in the muni space, where information is harder to come by,” Thompson said.

“We see a lot of value in being able to take those capabilities that Nuveen has and bring them into this actively managed construct to provide a nice new alternative for our clients, so that if they do want to go both active and indexed, now they have the tools from us to be able to do so,” she added.

State Street Global Advisors has a long history of partnering with other firms to take advantage of their expertise in the fixed income space for its ETFs, including DoubleLine and Blackstone in addition to Nuveen.

Contact Heather Bell at [email protected]