On Wednesday, Nuveen launched a pair of funds offering different takes on municipal bond investing.
Building Income From Munis
The first fund on the docket is the Nuveen Municipal Income ETF (NUMI). This fund uses municipal bonds to seek income, with a secondary goal of capital appreciation. NUMI is actively managed and has a net expense ratio of 0.29%.
For NUMI, at least 65% of the fund’s net assets go towards municipal bonds of an investment grade quality. Inversely, up to 35% of the remaining net assets could be allocated toward high yield munis.
A High Yield Alternative
Nuveen’s other new fund, the Nuveen High Yield Municipal Income ETF (NHYM), opts for more high yield exposure. The fund has a slightly higher net expense ratio of 35 basis points.
Inverse to NUMI, 65% or more of NHYM’s net assets go to bonds rated BBB/Baa or lower. This range is notably close to the high yield threshold of bonds lower than or equal to a BB/Ba rating. Additionally, distressed securities may encompass up to 10% of this fund’s net assets.
Both NUMI and NHYM look to provide yield that is exempt from federal income tax. Thus, the fund selects a wide variety of munis, including general obligation bonds, participation interests, and revenue bonds.
Each of these new funds from Nuveen operate on long-term time horizons. The average portfolio maturity for both NHYM and NUMI is expected to sit at higher than 10 years.
“The NHYM and NUMI strategies bring two of our highest conviction active strategies to market in the wrapper that is increasingly in-demand by muni investors,” said Daniel Close, head of municipals at Nuveen. “NUMI directly answers the significant appetite in the market for longer duration allocations and NHYM has been created for those investors seeking additional yield.”
NUMI and NHYM now join Nuveen’s extensive fund portfolio, which offers a variety of investment strategies within the ETF wrapper. Nuveen has over 20 ETFs listed in the United States. One of the largest Nuveen ETFs, the Nuveen ESG Large-Cap Value ETF (NULV ), has over $1.6 billion in assets under management.
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