Schwab Asset Management, the asset management arm of The Charles Schwab Corp., launched the Schwab Municipal Bond ETF (NYSE Arca: SCMB). The fund begins trading on the NYSE Arca on October 12.
This ETF provides access to the broad U.S. investment-grade, tax-exempt bond market with the additional benefit of potentially higher tax efficiency of its ETF structure. It can serve as part of the core of a diversified portfolio.
SCMB’s goal is to track as closely as possible, before fees and expenses, the total return of the ICE AMT-Free Core U.S. National Municipal Index, which measures the performance of the U.S. AMT-free municipal bond market. It seeks to provide income exempt from federal taxes and is not subject to the federal alternative minimum tax. The fund has a high credit quality profile, investing only in investment-grade securities.
“As bond yields have risen, fixed income investing is more attractive than it has been in years, making this an opportune moment to introduce a new choice for investors seeking a low-cost, straightforward approach to income, diversification and risk management in their portfolios,” said John Sturiale, head of product management and innovation, Schwab Asset Management, in a news release. “With the launch of the Schwab Municipal Bond ETF, we at Schwab Asset Management are extending our legacy of low-cost leadership and expanding our well-established line-up of bond ETFs that can play an important role in a diversified portfolio.”
As the fifth-largest provider of ETFs, Schwab Asset Management has more than a decade of experience managing ETFs and a robust capital markets team that plays a crucial role in ensuring the Schwab ETFs function efficiently. Schwab bond ETFs seek to be among the cheapest across the industry’s leading ETF providers. The Schwab Municipal Bond ETF is Schwab Asset Management’s eighth bond ETF and the 29th Schwab ETF overall.
“Schwab has a long history of using its scale as an advantage to provide advisors with broad stock and bond market access for an extremely low fee,” said Todd Rosenbluth, head of research at VettaFi. “This new fund is likely to entice people to participate in the diversification and liquidity benefits of municipal bond ETFs.”
SCMB has an expense ratio of 0.03%. The prospectus can be found online.
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