State Street Global Advisors today rolled out the SPDR Nuveen Municipal Bond ETF (MBND), an actively managed product created in partnership with Nuveen Asset Management.
According to the prospectus, the fund will invest mainly in municipal bonds included in the Bloomberg Barclays 3-15 Year Blend (2-17) Municipal Bond Index, which comprises investment-grade municipal securities ranging from two to 17 years in maturity.
Within that universe, Nuveen portfolio managers Timothy Ryan and Steven Hlavin will aim to find higher-yielding and undervalued municipal bonds with above-average returns. The portfolio will target a weighted average duration between 4.5 and 7 years and a weighted average maturity between five and 12 years.
The fund may overweight or underweight a bond by 5% relative to its index weight. It can also over- or underweight sectors by 10%.
The fund's net expense ratio is 0.40%.
MBND is the fourth ETF collaboration between State Street and Nuveen, the investment management business of TIAA. The previous three products are passive muni-bond funds based on Bloomberg indices: the SPDR Nuveen Bloomberg Barclays High Yield Municipal Bond ETF (HYMB); the SPDR Nuveen Bloomberg Barclays Municipal Bond ETF (TFI); and the SPDR Nuveen Bloomberg Barclays Short Term Municipal Bond ETF (SHM).
The municipal and short-term municipal funds debuted in 2007; the TFI fund has $3.5 billion and the SHM fund has $4.5 billion in assets. The high-yield fund began trading in 2011 and holds $1.5 billion.
Municipal bond income is generally exempt from federal tax and, in some cases, from state tax. This means municipal bonds are best used in taxable investment accounts.