Muni Bond ETFs – Active or Passive?

Bond Buyer‘s Dan Seymour takes a look at the exchange traded fund choices for municipal bond investors in the article The Two Faces of ETFs.

Seymour compares passive and active funds while getting insight from both investment managers and fund sponsors on the pros and cons of actively managed municipal bond ETFs.

Active fund managers, including Grail Advisors, Eaton Vance and PIMCO, boast that active ETFs provide investors with access to investment expertise without the high cost structure of a mutual fund.  Fans of passive funds point out that investors seeking targeted exposure do not want an ETF manager suddenly shifting strategies and balk at paying higher fees for active funds when managers’ ability to beat the market is often questionable.

ETFs highlighted by Seymour include the iShares S&P National AMT-Free Municipal Bond Fund (MUB) and the Pimco Intermediate Municipal Bond Strategy Fund (MUNI).

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