iShares National Muni Bond ETF

MUB

Market cap $43.1B

IEI charges a higher expense ratio but has a higher dividend yield than MUB. MUB has multiple tax exemptions, while IEI has none.

There's a reason a lot of people end up getting stretched thin financially in retirement.

Interest gained from investing in MUB is exempt from federal income tax. VCIT offers a higher dividend yield and lower expense ratio than MUB.

Fidelity's FBND ETF has a higher dividend yield than BlackRock's MUB ETF, but MUB has a significantly cheaper expense ratio. MUB holds far more bonds with a tax-exempt municipal focus, while FBND tilts heavily into energy and corporate credit.

AGG carries a slightly lower expense ratio and offers a higher yield than MUB. AGG has seen stronger 1-year returns but experienced a deeper five-year drawdown.

The iShares National Muni Bond ETF is the largest muni bond ETF in the market. Muni bonds are some of the lowest-yielding bonds in the market, before tax. After-tax yields are quite a bit higher, but don't seem terribly competitive versus peers.

iShares National Muni Bond ETF offers high credit quality exposure but delivers a modest 3.15% yield, reflecting its index-tracking approach. MUB's strategy of holding only high-grade munis and broad market tenor results in middling returns, especially compared to more selective, credit-risk-focused funds. I believe credit risk is overpriced in munis; taking more nominal credit risk, as in SHYM or NMCO, can deliver 1–2% higher yields with manageable risk.

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

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

I rate both MUB and VTEB as buys, expecting capital appreciation from anticipated rate cuts to 3.25–3.5% by Q1 2026. VTEB's longer maturity profile positions it for higher performance as rates decline, making it my preferred pick for this rate-cut thesis. Both ETFs offer high credit quality, strong liquidity, and diversification, but recent returns have been weak due to delayed rate cuts.