SPDR Nuveen ICE Municipal Bond ETF

TFI

Market cap $3.3B

Municipal bond funds like TFI are best suited for investors with a marginal tax rate of 24% or higher, due to tax-equivalent yields. Open-ended ETFs like TFI avoid large discounts/premiums to NAV but carry minimal redemption risk given the liquidity of municipal bonds. TFI's expense ratio of 0.23% is reasonable, balancing between lower-cost index funds and higher-cost active management.

With the GOP in control, extending current tax rates beyond 2025 is uncertain, and inflation concerns may limit Fed rate cuts to just two. The SPDR Nuveen Bloomberg Municipal Bond ETF (TFI) is analyzed but earns a Sell rating due to its lower risk/return performance compared to peers. Despite a high-quality portfolio with mostly AAA or AA-rated bonds, TFI's effective duration and built-in NAV deterioration are concerns.

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.

Nisha Patel, Parametric fixed income portfolio manager, joins 'The Exchange' to discuss the municipal bond market as rate cuts and municipal bond demand grows.

Investors were net sellers of fund assets for the second week in three, redeeming a net $11.6B for the LSEG Lipper fund flows week ended Wednesday (February 21). For the flows week, the Treasury yield rose at all maturities of the curve, except for the two-month yield, which experienced a one basis point decline to end the week at 5.50%.