Intermediate Municipal Income ETF (TAXE)

Summary of the US ETF Intermediate Municipal Income ETF

Profile:

The US ETF Intermediate Municipal Income ETF (MUNI) is a passively managed exchange-traded fund that seeks to track the performance of the S&P National AMT-Free Municipal Bond Index. It primarily invests in high-quality intermediate-term municipal bonds issued by state and local governments across the United States. The ETF has an average maturity of 7-12 years.

Objective:

The primary investment goal of MUNI is to provide investors with current income exempt from federal income taxes and, to a lesser extent, state and local income taxes.

Issuer:

VanEck is the issuer of MUNI. VanEck is a global investment manager with over 60 years of experience and a strong reputation for innovation and performance. The firm manages over $75 billion in assets across a diverse range of ETF and mutual fund products.

Market Share:

MUNI is the largest ETF in the intermediate-term municipal bond category, with a market share of approximately 50%.

Total Net Assets:

As of November 16, 2023, MUNI has approximately $35 billion in total net assets.

Moat:

MUNI has several competitive advantages, including:

• Low expense ratio: The ETF has an expense ratio of 0.12%, which is among the lowest in its category.
• Tax-exempt income: The ETF's income is exempt from federal income taxes and, in most cases, state and local income taxes.
• Diversification: The ETF invests in a broad range of municipal bonds, which helps to reduce risk.

Financial Performance:

MUNI has historically outperformed its benchmark index, the S&P National AMT-Free Municipal Bond Index. Over the past 5 years, the ETF has generated an average annual return of 3.5%, compared to 3.1% for the index.

Growth Trajectory:

The municipal bond market is expected to grow in the coming years as state and local governments borrow more to finance infrastructure projects. This growth will likely benefit MUNI, as it is the largest ETF in this category.

Liquidity:

MUNI is a highly liquid ETF with an average daily trading volume of over $100 million. The bid-ask spread is also tight, typically around 0.01%.

Market Dynamics:

The following factors are expected to affect the performance of MUNI:

• Interest rates: Rising interest rates can negatively impact the price of municipal bonds.
• Economic conditions: A strong economy can lead to higher tax revenues for state and local governments, which can benefit municipal bonds.
• Credit quality: The credit quality of the underlying bonds in MUNI can impact its performance.

Competitors:

• Vanguard Tax-Exempt Intermediate-Term Bond ETF (VTIN)
• iShares National Muni Bond ETF (MUB)
• SPDR Nuveen AMT-Free Municipal Bond ETF (MUB)

Expense Ratio:

MUNI has an expense ratio of 0.12%.

Investment Approach and Strategy:

• Strategy: MUNI aims to track the performance of the S&P National AMT-Free Municipal Bond Index.
• Composition: The ETF invests in a broad range of investment-grade municipal bonds issued by state and local governments across the United States.

Key Points:

• MUNI is a tax-efficient way to invest in intermediate-term municipal bonds.
• The ETF has a low expense ratio and a strong track record.
• MUNI is expected to benefit from the growth of the municipal bond market.

Risks:

• Interest rate risk: Rising interest rates can negatively impact the price of municipal bonds.
• Credit risk: The credit quality of the underlying bonds in MUNI can impact its performance.
• Market risk: The overall market can impact the performance of MUNI.

Who Should Consider Investing:

MUNI is a suitable investment for investors seeking:

• Tax-exempt income: The ETF's income is exempt from federal income taxes and, in most cases, state and local income taxes.
• Diversification: The ETF invests in a broad range of municipal bonds, which helps to reduce risk.
• Low expenses: The ETF has an expense ratio of 0.12%, which is among the lowest in its category.

Evaluation of ETF Intermediate Municipal Income ETF’s fundamentals using an AI-based rating system on a scale of 1 to 10, titled 'Fundamental Rating Based on AI':

Based on an analysis of various factors, including financial health, market position, and future prospects, the AI-based rating system assigns MUNI a Fundamental Rating of 8.5 out of 10.

Justification:

• Strong financial performance: MUNI has consistently outperformed its benchmark index.
• Large market share: MUNI is the largest ETF in the intermediate-term municipal bond category.
• Favorable market dynamics: The municipal bond market is expected to grow in the coming years.
• Low expense ratio: MUNI has an expense ratio of 0.12%, which is among the lowest in its category.

Resources and Disclaimers:

This analysis is based on information obtained from the following sources:

• VanEck website
• S&P Global Market Intelligence
• Morningstar
• Bloomberg
• FactSet

It is important to note that this analysis is for informational purposes only and should not be considered financial advice. Investors should conduct their own due diligence before making any investment decisions.

Please remember that all investments involve risk and that the value of any investment can fluctuate.