On Thursday, WisdomTree added two new funds to its growing selection of ETF products. Both offer laddered takes on municipal bond investing.
Advisors and investors looking to build core muni exposure may wish to take a look at the WisdomTree Core Laddered Municipal Fund (WTMU). The actively managed fund has a net expense ratio of 25 basis points.
With a focus on value, WTMU’s goal is to seek income that is exempt from federal income taxes. Firstly, the fund focuses on investment-grade munis, building a portfolio with an average duration between four to eight years. Investments within the fund are then placed in a laddered framework based on asset maturity.
Unlike WTMU, the actively managed WisdomTree High Income Laddered Municipal Fund (WTMY) places a stronger emphasis on building income. This fund operates with a net expense ratio of 0.35%.
Much like its core counterpart, WTMY looks to build a laddered selection of muni bunds to generate income exempt from federal income taxes. However, this fund stands out by also allocating a portion of its assets towards high yield securities. WTMY specifically expects to maintain an average portfolio duration between five to 10 years.
Notably, both funds may allocate a smaller selection of assets to munis subject to the federal alternative minimum tax. That said, neither fund expects to hold more than 30% of their net assets in such investments.
Making Room for Municipal Bonds
“In today’s changing fixed income landscape, investors seek stability and income,” said Kevin Flanagan, head of fixed income strategy at WisdomTree. “Municipal bonds can potentially offer strong credit quality, lower default rates than corporate bonds, and resilience in rising rate environments — making them a compelling choice.”
WisdomTree currently has about 80 different ETFs listed in the U.S. As a whole, these funds account for over $80 billion in assets under management.
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