The Rise and Rise of Muni Bond ETFs

In looking at ten-year data on the holders of municipal bonds in the U.S. – an asset that has almost doubled in the period – there are some striking trends. To make them more obvious, I have indexed things to calendar year 2000 across all the major holders, making that year “1.0” and then subsequent years seen in relative terms. Check it out below:

muni-bonds-indexed

While the assets still only make it less than 10% of the muni market, the growth in ETF muni assets is eye-popping. Considering that there were no municipal bond ETFs in the U.S., we have zoomed straight up ever since, with an 8-fold increase in the period, and 3x in the last year alone. The interest is understandable – tax-free yield with relatively low risk – but it’s hard not wonder, given current state budget troubles, whether retail investors’ timing is just as bad as ever.

[via The Bond Buyer]

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  1. Record Muni Bond Market Volume
  2. The Case for Eliminating Muni Bond Insurers, Part II
  3. Warren Buffett and the Case for Eliminating Municipal Bond Insurance
  4. Afternoon Reading: Bonds, Muni-land, Germany, Lehman, etc.
  5. A La Recherche du Bond Perdu