Why Muni Bond ETFs Look Ripe For The Picking

February 02, 2017

While there is potential for interest rates to move up from here, we expect longer-term rates to remain range-bound over the near term around the current levels.

With expectations of economic growth in 2017, and likely mounting inflationary pressures, the U.S. Federal Reserve has indicated it will likely step up the pace of rate hikes. This should taper any pricing in of inflation on the long end of the curve, thus creating some support for sectors like high-yield municipal bonds.

For investors interested in high-yield municipal bonds, there are several muni bond ETF options. The SPDR Nuveen S&P High Yield Municipal Bond ETF (HYMB) tracks the S&P Municipal Yield Index and has a net expense ratio of 0.45%.

VanEck offers two high-yield municipal ETFS. The VanEck Vectors High Yield Municipal ETF (HYD) tracks the Bloomberg Barclays Municipal Custom High Yield Index and has a net expense ratio of 0.35%. The VanEck Vectors Short High-Yield Municipal Index ETF (SHYD) tracks the Bloomberg Barclays Municipal High Yield Short Duration Index and offers investors high-yield municipal exposure with a lower duration, and also has a net expense ratio of 0.35%.

At the time of writing, Stringer Asset Management (SAM) held HYMB among its universe of ETFs included in its suite of ETF Portfolios. SAM is a Memphis, Tennessee third-party investment manager and ETF strategist. Contact SAM at 901-800-2956 or at [email protected]. For a complete list of relevant disclosures, please click here.


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