A Broad and Strong Municipal Bond Fund
Outstanding tracking error and low ownership costs make this fund a compelling option.
Historically, gaining access to municipal bonds through an index strategy has been difficult because the muni bond market is much more fragmented and expensive to trade than other fixed-income markets. But process improvements over the past several years, combined with a deeper knowledge of the market, have provided asset management firms like Vanguard with an advantage. An index-tracking fund like Vanguard Tax-Exempt Bond ETF (VTEB) now features exceptionally low tracking error, making it a solid choice for exposure to the broader municipal-bond market.
VTEB offers broad exposure to investment-grade municipal bonds and is one of the cheapest funds in the muni national intermediate Morningstar Category, earning a Morningstar Analyst Rating of Silver.
Daniel Sotiroff does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.