Muni and corporate bonds trading activity has been reaching record levels through the first half of 2025 at the Intercontinental Exchange (ICE). This certainly speaks to the attractiveness of both, which offer yield and strong fundamentals in the current market landscape.
According to data from ICE, corporate bonds hit a national volume of $120 billion, while muni bonds totaled $109 billion. The rise represented an increase of 20% and 35%, respectively, from the previous year.
“We’re pleased to see the strong activity in the first half of the year, which marks the fourth consecutive year of volume increases in our corporate and municipal bond markets,” said Peter Borstelmann, president of ICE Bonds. ICE has been expanding its trading platforms, while building out its institutional and wealth management network. That’s a potential window into the activity of institutional and accredited investors regarding muni and corporate bonds.
Fixed income investors looking to diversify their portfolios that mainly hold Treasuries may want to consider either munis, corporates, or both. Active funds have been garnering a lot of attention this year. Vanguard has a pair of ETFs worth looking at for those who want simple, core exposure to either munis or corporates in a cost-effective investment vehicle.
Get to the Core of Munis & Corporate Bonds
With value offered in both muni and corporate bonds, investors can get core exposure to add to an equities portfolio in two ways: the Vanguard Tax-Exempt Bond ETF (VTEB ) and the Vanguard Total Corporate Bond ETF Shares (VTC ).
VTEB tracks the Standard & Poor’s National AMT-Free Municipal Bond Index. This index measures the performance of the investment-grade segment of the U.S. municipal bond market. Holdings primarily consist of state or local governments or agencies whose interests are exempt from U.S. federal income taxes, and the federal alternative minimum tax. Aside from their tax-free income, munis are an ideal option for fixed income investors who want a balance between mitigating credit risk and attaining yield. Speaking of which, its 30-day SEC yield is 3.79% as of August 22.
For those who don’t mind the additional credit risk associated with credit bonds in order to attain higher yield can look to VTC. The fund tracks the performance of the Bloomberg U.S. Corporate Bond Index, which exposes investors to investment-grade, fixed-rate, and taxable corporate bonds. As of July 31, it carries a 30-day SEC yield of 5.06%.
Both funds carry a low expense ratio of 0.03%, or $3 per every $10,000 invested.
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