T. Rowe Price has launched four new active fixed income ETFs, with three of those being tax-free municipal bond ETFs. Tax-free muni bond ETFs have seen increased interest in recent years, taking advantage of the ETF wrapper’s strengths and flexibility compared to mutual funds. The four new ETFs, including a multisector income ETF, brings the firm’s suite to 28 total strategies.
The trio of tax-free ETFs include the T. Rowe Price Short Municipal Income ETF (TMNS), the T. Rowe Price Long Municipal Income ETF (TMNL), and the T Rowe Price High Income Municipal ETF (THYM).
Active Tax-Free ETFs to Watch
Each provides a slightly different approach. TMNS charges 18 basis points (bps) to invest in shorter duration investment grade municipal bonds. The fund is managed by James Lynch, who also manages the firm’s existing T. Rowe Price Intermediate Municipal Income ETF (TAXE ), which invests in intermediate term securities.
TMNL charges 26 bps to actively invest longer-term municipal bonds. Managed by Austin Applegate and Timothy Taylor, it serves to complement TMNS and TAXE by covering the duration ranges across short, intermediate and long-term municipals.
The tax-free ETF suite launches also included the new T. Rowe Price High Income Municipal ETF (THYM), which combines a long-term ETF approach with a pursuit of higher income. The fund looks to low to upper-medium quality municipal bonds to pursue that stronger income. Charging 32 bps, its managers include Colin Bando and Michael Kane.
With the year drawing to a close, investors may be considering ways to reduce their overall tax bill. T. Rowe Price’s suite of actively managed tax-free ETFs provides some interesting landing places for tax loss-harvested assets. Looking ahead, the firm’s fundamental research approach to municipal bonds could help its tax-free ETFs outperform rival, passive municipal bond funds.
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