ETFdb Logo
ETFdb Logo
  • ETF Database
  • Channels
    • Active ETF
    • Alternatives
    • Beyond Basic Beta
    • China Insights
    • Climate Insights
    • Commodities
    • Core Strategies
    • Crypto
    • Disruptive Technology
    • Dividend
    • Dual Impact
    • Emerging Markets
    • Energy Infrastructure
    • ESG
    • ETF Building Blocks
    • ETF Education
    • ETF Strategist
    • Fixed Income
    • Free Cash Flow
    • Future ETFs
    • Global Diversification
    • Gold/Silver/Critical Minerals
    • Innovative ETFs
    • Institutional Income Strategies
    • Leveraged & Inverse
    • Managed Futures
    • Market Insights
    • Megatrends
    • Modern Alpha
    • Multi-Asset
    • Night Effect
    • Portfolio Strategies
    • Retirement Income
    • Richard Bernstein Advisors
    • Tax Efficient Income
    • Thematic Investing
    • Volatility Resource
  • Tools
    • ETF Screener
    • ETF Country Exposure Tool
    • ETF Sector Tracker Tool
    • ETF Database Categories
    • Head-To-Head ETF Comparison Tool
    • ETF Stock Exposure Tool
    • ETF Issuer Fund Flows
    • Indexes
    • Mutual Fund To ETF Converter
    • ETF Data for Journalists
    • ETF Nerds
  • Research
    • First Bitcoin ETF
    • ETF Education
    • Equity Investing
    • Dividend ETFs
    • Leveraged ETFs
    • Inverse ETFs
    • Index Education
    • Index Insights
    • Top ETF Sectors
    • Top ETF Issuers
    • Top ETF Industries
  • Webcasts
  • Themes
    • AI ETFs
    • Blockchain ETFs
    • See all Thematic Investing ETF themes
    • ESG Investing
    • Marijuana ETFs
  • Multimedia
    • ETF 360 Video Series
    • ETF Trends on Videos
    • ETF Trends on Podcasts
    • ETF Prime Podcast
  • Company
    • About Us
    • Swag Store
  • PRO
    • Pro Content
    • Pro Tools
    • Advanced
    • FAQ
    • Pricing
    • Free Sign Up
    • Login
  1. ETF of the Week: Columbia Multi-Sector Municipal Income ETF
News
Share

ETF of the Week: Columbia Multi-Sector Municipal Income ETF

Aaron NeuwirthDec 09, 2021
2021-12-09

ETF Trends CEO Tom Lydon discussed the Columbia Multi-Sector Municipal Income ETF (MUST ) on this week’s “ETF of the Week” podcast with Chuck Jaffe on the MoneyLife Show.

MUST seeks investment results that, before fees and expenses, closely correspond to the index’s performance. The fund invests at least 80% of its net assets in bonds and other debt instruments issued by or on behalf of state or local governmental units whose interests are exempted from U.S. federal income tax.

Considering the drawbacks of traditional bond index-based investments, investors can turn to alternative fixed-income ETF strategies to diversify risk and maintain income, especially in a rising interest rate environment ahead.

In the current fixed-income environment, labor markets have normalized and elevated inflation, which is here to stay for the time being. There are concerns that the Federal Reserve will begin curtailing its easy monetary policy next year. As a result, there’s a threat of rising interest rates.

Consequently, investors should consider the value in diversification rather than further upside potential, especially with the markets more at risk of rising interest rates. However, credit valuations leave little room for error, with tight spreads already reflecting high valuations in the credit markets. There may be room for fixed-income investors to find value, but people will have to go beyond their comfort zones or away from traditional bond benchmarks like the Bloomberg U.S. Aggregate Bond Index.

Bloomberg U.S. Aggregate Bond Index investors take more risk to generate less income than ever before. Over the years, the duration or maturity of bonds within the index has increased, which leaves investors open to higher interest rate risks. Meanwhile, yields are down, so investors are more at risk of rising rates hurting their capital investments with less income generation ahead.


Content continues below advertisement

Increase That Exposure

Investors need more credit exposure or even 80% in high yield in today’s low-rate environment to generate a 4% yield. This would expose them to risks that many may not be comfortable with.

Municipal bonds can instantly diversify an investment portfolio centered on the U.S. Aggregate Bond Index. The “Agg” does not include municipal bond exposure.

Demand for municipal bond ETFs continues to climb in 2021. Despite representing 6.8% of the fixed income ETF universe, municipal bond ETFs have gathered an 11% share of the $154 billion of net inflows for the asset category as of October 7. According to CFRA ETF data, the $16.4 billion of year-to-date net inflows for the municipal bond sub-category are higher than corporate bonds ($16.2 billion) and Treasury and Government bonds ($8.7 billion) ETF sub-categories. In addition, the net inflows for municipal bond ETFs in 2021 have already exceeded the $14.6 billion for all of 2020.

Supporting the demand for munis this year, there are growing concerns that President Joe Biden and the Democratic-controlled Congress could raise taxes. Consequently, muni bonds and the tax-free income they provide now appear more attractive to many investors.

Many states, cities, and counties have come out of the COVID-19 pandemic better than previously anticipated, mitigating fears that pandemic-related budget shortfalls would weigh down the value of local-government debt. Moody’s Investors Service even upwardly revised its outlook on state and local governments to “stable” from “negative” in March, pointing to the better-than-expected revenue and federal stimulus measures.

Listen to the Full Podcast Episode on MUST:

For more podcast episodes featuring Tom Lydon, visit our podcasts category.

» Popular Pages

  • Tickers
  • Articles

Feb 08

Exchange and Junior Achievements Build Community

Feb 08

China's Aggressive Clean Energy Stance Sets Up This ETF

Feb 08

Earnings, the Economy, and the Market’s Reality

Feb 08

California’s Aggressive Climate Measures Puts this ETF in Play

Feb 08

As Financial Companies Embrace Blockchain, Look at BLKC

Feb 08

Get Exposure With This ETF as Industries Rely on AI

Feb 08

The 2023 Case for Diversification, China, and FLCH

Feb 08

What ESG Packaging Says About ESG Investing

Feb 08

What's Next as Crypto Takes an Early February Breather

Feb 08

Don’t Sleep on Nationwide's Risk-Managed ETFs' Yield

QQQ

Invesco QQQ Trust

SPY

SPDR S&P 500 ETF Trust

VOO

Vanguard S&P 500 ETF

VGT

Vanguard Information...

SMH

VanEck Semiconductor ETF

XLK

Technology Select Sector SPDR...

VTI

Vanguard Total Stock Market...

SOXX

iShares Semiconductor ETF

BLOK

Amplify Transformational Data...

META

Roundhill Ball Metaverse ETF


Content continues below advertisement

Loading Articles...
Help & Info
  • Contact Us
Tools
  • ETF Screener
  • ETF Analyzer
  • Mutual Fund to ETF Converter
  • Head-To-Head ETF Comparison
  • ETF Country Exposure Tool
  • ETF Stock Exposure Tool
  • ETF Performance Visualizer
  • ETF Database Model Portfolios
  • ETF Database Realtime Ratings
  • ETF Database Pro
More Tools
  • ETF Launch Center
  • Financial Advisor & RIA Center
  • ETF Database RSS Feed
Explore ETFs
  • ETF News
  • ETF Picks of the Month
  • ETF Category Reports
  • Premium Articles
  • Alphabetical Listing of ETFs
  • Best ETFs
  • Browse ETFs by ETF Database Category
  • Browse ETFs by Index
  • Browse ETFs by Issuer
  • Compare ETFs
Legal
  • Terms of Use and Privacy Policy
  • © 2023 VettaFi LLC. All rights reserved.
Follow ETF Database
Follow ETF Database

Advertisement

Is Your Portfolio Positioned With Enough Global Exposure?

ETF Education Channel

How to Allocate Commodities in Portfolios

Tom LydonApr 26, 2022
2022-04-26

A long-running debate in asset allocation circles is how much of a portfolio an investor should...

Core Strategies Channel

Why ETFs Experience Limit Up/Down Protections

Karrie GordonMay 13, 2022
2022-05-13

In a digital age where information moves in milliseconds and millions of participants can transact...

}
X