A Muni ETF for Investors Seeking Tax Relief
SPDR Nuveen Barclays Municipal Bond ETF offers a portfolio of high-quality muni bonds at a low cost and a relatively attractive tax-equivalent yield.
SPDR Nuveen Barclays Municipal Bond ETF offers a portfolio of high-quality muni bonds at a low cost and a relatively attractive tax-equivalent yield.
Thomas Boccellari: Taxable-bond investors interested in exposure to only the highest-quality municipal bonds may consider SPDR Nuveen Barclays Municipal Bond ETF (TFI). The fund tracks a broad index of municipal bonds with an average credit rating of AA- or better. Municipal bonds are bonds issued by state and local governments to fund a variety of projects, such as education, utilities, and transportation. Because municipal-bond interest is exempt from federal taxes, municipal-bond funds are most appropriate for investors in high tax brackets and best used in a taxable accounts.
At first glance, the fund's yield may appear low relative to other fixed-income investments with similar risk. However, when you examine the fund's tax-equivalent yield--or the yield that a taxable bond would need to offer to equal the fund's tax-exempt yield for investors in the top tax bracket--it's actually higher than comparable-risk, taxable-bond funds.
Additionally, the fund's more stringent credit-rating screen ensures that only the highest-quality municipal bonds are included. This can greatly reduce the chance of default within the portfolio and can reduce the fund's volatility.
The fund's 23-basis-point expense ratio is not the cheapest in its category; however, it is below its category average. Further, it is currently the only municipal-bond fund that includes an AA- credit rating or better credit-quality screen.
This fund is best used by risk-averse investors looking for a portfolio of high-quality municipal bonds and tax relief.
Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.
We’d like to share more about how we work and what drives our day-to-day business.
We sell different types of products and services to both investment professionals
and individual investors. These products and services are usually sold through
license agreements or subscriptions. Our investment management business generates
asset-based fees, which are calculated as a percentage of assets under management.
We also sell both admissions and sponsorship packages for our investment conferences
and advertising on our websites and newsletters.
How we use your information depends on the product and service that you use and your relationship with us. We may use it to:
To learn more about how we handle and protect your data, visit our privacy center.
Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.
To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.
Read our editorial policy to learn more about our process.