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ETF Specialist

Vanguard Tackles the Pitfalls of Muni Indexing

The mutual fund giant takes a passive approach to the diverse and fragmented muni-bond market -- and takes on iShares, to boot.

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A version of this article was published in the January 2016 issue of Morningstar ETFInvestor. Download a complimentary copy of ETFInvestor here.

In August 2015, Vanguard launched the market's first tax-exempt index open-end mutual fund, which also featured an exchange-traded fund share class. Prior to the launch, there were only a handful of broad-based muni index ETF options available to investors and no open-end index mutual funds; many managers cited the muni market's diverse and fragmented nature as challenges to successful indexing.

Elizabeth Foos does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.