Municipal bonds are off to solid starts in 2026. That indicates advisors and income investors can revisit the asset class known for safety. A slew of ETFs, including plenty with favorable fees, can provide muni access. Enter the Schwab Municipal Bond ETF (SCMB ). The $3.6 billion SCMB, which turned three years old last October, follows the ICE AMT-Free Core U.S. National Municipal Index. It provides investors with broad representation of the U.S. tax-exempt muni market.
With an effective duration of 6.8 years, SCMB is an intermediate-term fund. That means it has the potential to reduce a portfolio’s correlations to equities and longer-dated bonds. Additionally, this ETF is cheap to own. It charges just 0.03% per year, or $3 on a $10,000 investment. Good news: There are even more reasons to consider the Schwab ETF.
Investors Don’t Have to Rush Into SCMB
While municipal bonds are among the best fixed income performers in the early innings of 2026, investors don’t have rush into the asset class and ETFs like SMCB right away. If history repeats, better pricing could be available in a couple of months.
“Another potential headwind for near-term performance involves seasonal factors. Since 1980, the worst month, on average, for the muni market has been March. That’s largely because some investors liquidate all or a portion of their muni holdings to help pay for their tax bill that’s due in April,” noted Schwab’s Cooper Howard.
On the other hand, seasonal trends aren’t guaranteed to repeat, and the longer an investor holds an ETF like SCMB, the more income they stack. Speaking of income, SCMB sports a 30-day SEC yield of 3.25% and a yield-to-maturity of 3.78%.
Government funding issues are also of concern to advisors and investors considering munis. That’s a relevant point in discussing SCMB because 64.60% of the ETF’s roster is comprised of revenue bonds. However, that issue could be more an example of headline risk than credible threat to the broader municipal bond market.
“In our view, the risks of changes to federal policy will continue to linger over the muni market but are more of a headline risk to the whole market than they are a credit risk to the whole market. Headline risk refers to the idea that some muni holders liquidate their positions due to a news headline which pushes prices lower,” added Howard.
Nearly all of SCMB’s holdings are rated AAA, AA or A.
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