Municipal Bonds: ETF
For fixed-income investors looking to gain exposure to the municipal bond market but for whom safety, diversification and liquidity are top concerns, the iShares National AMT-Free Muni Bond ETF (MUB) is a solid choice.
Exchange-traded funds are appealing because they offer greater diversification and liquidity than an individual munibond. They also typically have lower fees than mutual funds. Another advantage: ETFs trade over a major exchange like stocks, rather than settling at the end of the day like mutual funds.
MUB is the 800-pound gorilla in municipal bonds, not just in terms of assets under management ($3.1 billion) but it also gives investors exposure to general obligation and revenue bonds from a wide range of state, county and municipal issuers. It also holds bonds of different maturities for further diversification.
This bond fund is a good choice for any income investor with a basic brokerage account — it gets you into municipal bonds and their tax benefits, plus MUB avoids any municipal bonds that might be subject to the alternative minimum tax, in a single vehicle. Conservative investors — particularly those in retirement –will enjoy the extra margin of safety and stability MUB delivers 95% of MUB’s munibond holdings rated “A” or above.
MUB is a popular bond fund, managing net assets of $3.1 billion. It’s also cheap, at an expense ratio of merely 0.25%, or $25 annually for every $25,000 invested.