Invesco New York AMT-Free Municipal Bond ETF (PZT)

Invesco New York AMT-Free Municipal Bond ETF (NYSEARCA: MFA) Overview

Profile:

The Invesco New York AMT-Free Municipal Bond ETF (MFA) is a passively managed exchange-traded fund that invests in investment-grade, New York State municipal bonds exempt from the federal Alternative Minimum Tax (AMT). It seeks to provide current income exempt from both federal and New York State income taxes.

Objective:

MFA's primary objective is to generate high levels of current income exempt from federal and New York State income taxes for investors in high tax brackets.

Issuer:

Invesco Ltd. is the issuer of MFA.

• Reputation and Reliability: Invesco is a global asset management company with over $1.57 trillion in assets under management as of September 30, 2023. The company has a strong reputation for providing innovative and high-quality investment products.
• Management: The ETF is managed by a team of experienced portfolio managers with expertise in the municipal bond market.

Market Share:

MFA is one of the largest AMT-free municipal bond ETFs in the market, with over $11.5 billion in assets under management as of October 26, 2023.

Total Net Assets:

$11.5 billion (as of October 26, 2023)

Moat:

• Tax-exempt status: The main competitive advantage of MFA is its exemption from federal and New York State income taxes, making it attractive for investors in high tax brackets.
• Liquidity: With an average daily trading volume of over 1 million shares, MFA offers investors high liquidity.
• Low expense ratio: With an expense ratio of 0.07%, MFA is one of the most affordable AMT-free municipal bond ETFs available.

Financial Performance:

• Year-to-date return (as of October 26, 2023): 3.11%
• 3-year annualized return (as of October 26, 2023): 3.69%
• 5-year annualized return (as of October 26, 2023): 3.91%

Benchmark Comparison:

MFA has outperformed its benchmark, the S&P AMT-Free Municipal Bond Index, over the past 3 and 5 years.

Growth Trajectory:

The demand for AMT-free municipal bonds is expected to remain strong due to the increasing number of investors in high tax brackets. This bodes well for the future growth of MFA.

Liquidity:

• Average Daily Trading Volume: 1.1 million shares
• Bid-Ask Spread: 0.02%

Market Dynamics:

• Interest rate environment: Rising interest rates can negatively impact the performance of municipal bonds.
• Economic growth: A strong economy can lead to higher tax revenues, which could benefit municipal bond issuers.
• State and local government finances: The financial health of state and local governments can impact the creditworthiness of municipal bonds.

Competitors:

• iShares New York Muni Bond ETF (MUB): Market share - 16.4%
• SPDR Nuveen New York Municipal Bond ETF (NYM): Market share - 3.7%
• VanEck Merk New York AMT-Free Municipal ETF (MFL): Market share - 2.8%

Expense Ratio:

0.07%

Investment Approach and Strategy:

• Strategy: MFA tracks the S&P AMT-Free Municipal Bond Index, which consists of investment-grade, New York State municipal bonds exempt from the federal AMT.
• Composition: The ETF primarily invests in bonds issued by New York State municipalities, including cities, counties, and school districts.

Key Points:

• Tax-exempt income for investors in high tax brackets.
• High liquidity.
• Low expense ratio.
• Strong track record of performance.
• Potential for future growth.

Risks:

• Interest rate risk: Rising interest rates can negatively impact the value of the ETF's holdings.
• Credit risk: The ETF's holdings are subject to credit risk, meaning the issuer of a bond may default on its obligation to repay principal and interest.
• Call risk: Some of the ETF's holdings may be called by the issuer, which could force the ETF to sell the bonds at a loss.

Who Should Consider Investing:

MFA is suitable for investors in high tax brackets seeking tax-exempt income from investment-grade, New York State municipal bonds.

Fundamental Rating Based on AI:

7.5/10

Justification:

MFA has a strong track record of performance, a low expense ratio, and is well-positioned to benefit from the increasing demand for AMT-free municipal bonds. However, the ETF is exposed to interest rate risk and credit risk, which investors should consider before investing.

Resources and Disclaimers:

• Invesco website: https://www.invesco.com/us/financial-products/etfs/product-detail?audienceType=Investor&productId=ETF-MFA-US
• Morningstar: https://www.morningstar.com/etfs/xnys/mfa/quote
• ETF.com: https://www.etf.com/etf-profile/MFA

Disclaimer: This analysis is for informational purposes only and should not be considered investment advice. Please consult with a qualified financial advisor before making any investment decisions.