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4 Bond ETFs for Varying Risk Appetites

Recent ‘fire sale’ might be a boon for bargain hunters

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iShares S&P National AMT-Free Municipal Bond Fund

iShares185MUB invests in investment-grade U.S. municipal bonds. The ETF has net assets of $3.6 billion, a yield of 2.8% and an annual expense ratio of just 0.25% — or $25 for every $10,000 invested.

Pros: Munis, which are issued by local governments to raise money, tend to be less risky than corporate bonds; U.S. municipal debt also tends to be safer than emerging-market issues. Municipal bonds’ tax-free status can be a benefit as well. MUB has a three-year average return of 5.6%.

Cons: Munis might be safer, but they are not default-proof, as the recent news out of Detroit proves. MUB’s performance this month is its worst since September 2008.

Verdict: MUB’s pain might be investors’ gain; the selloff has dumped shares of the fund into the bargain basement. And savvy investors appear to have found the muni market’s bottom — MUB was up over 2% by midday Wednesday.

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