VanEck High Yield Muni ETF

HYD

Market cap $3.64B

State Street® SPDR® Nuveen ICE High Yield Municipal Bond ETF (HYMB) is rated a buy, while VanEck High Yield Muni ETF (HYD) is rated hold. HYMB offers higher yields and better risk-adjusted returns despite a slightly higher expense ratio and increased volatility compared to HYD. Current stabilizing interest rates and resilient municipal fundamentals create a favorable outlook for high-yield municipal bonds.

Many Boomers in 2025 need dependable passive income, and one outstanding way to achieve this is to invest in exchange-traded funds (ETFs).

HYD offers exposure to high-yield, long-term, tax-exempt U.S. municipal bonds, appealing to income-focused investors seeking tax advantages. The fund aims to track the overall performance of the high-yield muni bond market, providing diversified access to this asset class. Current market pricing and yield levels present a contrarian entry point for investors comfortable with elevated credit risk.

VanEck High Yield Muni ETF offers attractive, tax-free income, strong yield, liquidity, and broad diversification, making it compelling for taxable portfolios. HYD's current 4.67% SEC yield translates to a much higher tax-equivalent yield, especially for high earners, with lower default risk than high-yield corporates. Potential Fed rate cuts could boost HYD's price, offering both income and capital gains; the current price is below historical highs, adding upside potential.

Though the S&P 500 has recently returned to positive territory in terms of year-to-date (YTD) performance, turbulence throughout 2025 so far may have pushed skittish investors away from stocks and toward bonds.

Compare corporate and municipal bonds, including risks, returns, and tax benefits. Learn which bond type fits your investment goals.

Municipal bonds aren't the most exciting segment of the fixed income market. However, they are increasingly gaining positive calls heading into 2025.

These four income-generating ETFs will attract more investors as interest rates decline.

Getting started building a portfolio, or just looking to fine-tune your allocation? With the millennial generation between their late 20s and early 40s, they're in the prime age group to start taking investing more seriously.

Munis often rise in the months following Fed rate cuts, suggesting there is still time to get in on this play. The fund's California exposure bothers me less given how strong equity returns have been. This means personal income tax revenues in the state will rise next year. High yield munis default less than comparable corporates, supporting positions in this fund.