Proprietary Data Insights Financial Pros’ Top Total Bond Market ETF Searches in the Last Month
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How Debt Can Be Lucky for You |
Global debt is at $300 trillion. It was at just $250 trillion in 2018. The debt market is massive, far larger than the stock market. And in the last 12 months, it’s lost a ton of value. Central banks’ higher rates mean lower bond prices. And if you sell bonds before they mature, that means a loss on the principal. So most people prefer to use bond ETFs or funds rather than select individual securities. Today, we look at financial pros’ top total bond market ETF search in the last month, First Trust Managed Municipal ETF (FMB). Key Facts About FMB
The First Trust Managed Municipal ETF actively invests in the illiquid municipal bond market using top-down sector analysis and fundamental credit research of individual issues. Income from state, city, and local governments is typically free from federal taxes. Some states also make their own bonds or bonds within the state free from state taxes. Since FMB invests in many different bonds, its number of holdings can vary widely. The current top 10 holdings are as follows: Source: First Trust The ETF has exposure to most of the states. The most populous states tend to take up the largest percentage of the portfolio.
Source: First Trust While FMB invests in any maturity level, it leans toward longer-dated bonds to increase yield. Most are between 10 and 20 years.
Source: First Trust Performance The fund’s performance hasn’t been great, returning only a couple of percentage points since its inception in 2014.
Source: First Trust Competition Risk-averse investors often choose from federal government or state and local government bonds, other countries’ bonds, and ETFs that invest in corporate debt and other securities backed by mortgages and other assets. Here’s some of FMB’s competition:
XMPT is the closest to FMB. But as you’ll see just below, its expense ratio is extremely burdensome. So FMB is best for municipal bond investors. Fees
Annual Dividend Yield
Five-Year Cumulative Performance
Our Opinion 7/10 The iShares National Muni Bond ETF (MUB) wasn’t among Trackstar’s top searches, but it’s quite similar to FMB. It has a 0.07% expense ratio, plus better returns, yield, and liquidity. We think that’s the best bet in the muni market. If you want a broader debt fund, AGG is the way to go. |
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