State Street SPDR Nuveen ICE Short Term Municipal Bond ETF

SHM

Market cap $3.5B

SHM offers low credit and interest rate risk via short-term municipal bonds, with tax advantages but limited yield. The fund's index-tracking approach and high proportion of unrated bonds may offer slightly higher income without substantial added risk. The expense ratio is reasonable for semi-active management, but the trailing yield of 2.46% barely outpaces inflation.

The Internal Revenue Service has announced new tax brackets for 2025. This makes now an ideal time to revisit the benefits of muni bond ETFs.

SPDR Nuveen Bloomberg Short Term Municipal Bond ETF has a short duration, highly rated bonds, low expense ratio, but low total return and yield. The ETF invests in short-term U.S. dollar denominated, fixed rate bonds, excluding bonds subject to Alternative Minimum Tax, with a tax-free yield of 1.5%. After my review, its low Total Return over the past decade, coupled with a miserly yield, earns SHM a Strong Sell rating, one of the few I have awarded.

Investors continue to turn to low-cost core taxable bond ETFs in 2024. The Vanguard Total Bond Market ETF (BND) and the iShares Core Aggregate Bond ETF (AGG) gathered $2.5 billion and $2.1 billion, respectively, as of late February.