Looking for options in fixed income? The space is offering significant appeal, especially for those nearing retirement. The yields and potential current income boost available in munis appeal on their own, but adding in strong fundamentals in the municipals space, and the right ETF invested in muni bonds could make a helpful addition to investor holdings.
See more: Don’t Miss This Pair of Current Income ETFs
Part of that big moment in muni bonds comes from the increasing use of ETFs to invest in the space. ETFs provide significant advantages in terms of transparency and taxes. In fixed income, they have helped securitize the space, as well.
Active ETFs, specifically, can offer real benefits to fixed income investing. Passive strategies that have to track their indexes often can’t scrutinize individual bond offerings as closely as active strategies do. Actively managed funds also bring to bear their managers’ significant experience in a given space. In an area like muni bonds which combines fundamentals with political concerns, for example, seasoned managers can help.
Right now, municipal bonds are seeing decent credit quality trends as well as some decent macro trends. Many U.S. cities are well positioned, while the supply outlook for muni remains healthy relative to demands. The U.S. election may impact that, as well, creating opportunities for active ETFs, particularly.
That’s where a pair of strategies like the Eaton Vance Intermediate Municipal Income ETF (EVIM ) and the Eaton Vance Short Duration Municipal Income ETF (EVSM ) can play a role. Current income could help portfolios right now, especially for those investors who need more current income. That traditionally means those near retirement, but it could include even younger investors.
Both actively invest, charging 29 and 19 basis points (bps) respectively. EVSM looks for short-duration opportunities while EVIM looks for offerings between three and eight years in duration. EVSM has returned 4.3% over one year per Morgan Stanley data. It produced a $0.15 income per share on the May 6th payable date. EVIM, meanwhile, has returned nearly 7% since inception. It saw a $0.16 payout on the May 6th payable date.
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