Looking For Shelter? WisdomTree's Latest ETFs Target Stability In Shaky Bond Market

WisdomTree, an international asset manager, has grown its portfolio with the introduction of two new municipal bond ETFs: the WisdomTree Core Laddered Municipal Fund WTMU and the WisdomTree High Income Laddered Municipal Fund WTMY. These funds are designed to offer investors tax-efficient income and diversification advantages.

These funds are currently trading at expense ratios of 0.25% and 0.35%, respectively.

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In today’s changing fixed-income environment, investors are increasingly looking for stability and income. Municipal bonds provide high credit quality, lower default rates compared to corporate bonds, and strength in rising-rate environments, which makes them an attractive option.

WTMU has a laddered maturity strategy of investing in municipal debt securities and can invest up to 30% of its assets in municipal securities subject to the federal alternative minimum tax. The fund seeks an average duration of between four and eight years, targeting securities that should mature or become callable within 15 years.

The ETF seeks current income that is tax-exempt at the federal level.

WTMY has a similar laddered strategy but aims to maximize income and yield by delivering a high current income that is free from federal income taxes. It has a targeted mix of high-yield municipal securities and investment-grade municipals. The fund aims for an average duration of five to ten years, focusing on securities likely to mature or be callable within 15 years.

The rollouts follow the increasing popularity of municipal bond funds. BlackRock rolled out the iShares Long-Term National Muni Bond ETF LMUB in March with an expense ratio of 0.09% to provide investors with investment-grade U.S. municipal bonds with maturities of 12 years or more.

Municipal bonds are becoming increasingly popular as a result of their potential tax benefits and relatively strong credit quality versus corporate bonds. They can also offer diversification benefits and potentially have defensive properties in a rising interest rate environment.

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