Five Muni Bond ETFs Your Broker Forgot to Mention

Municipal bonds and the ETFs have sure garnered their fair share of negative publicity in 2011. Whether it has been skewering by Meredith Whitney, plenty of notoriety for the pathetic fiscal situations in states like California and Illinois or potential bankruptcies in scores of cities and towns throughout the U.S., what was once a benign asset class has turned controversial. The U.S. muni bond market is massive, $3 trillion by some estimates, so an implosion in this market could be catastrophic. On the other hand, the specter of such an event and several municipal bankruptcies from coast to coast over the past several years have served to boost yields on munis and in an environment where yield is prized, some muni bond ETFs may just be worth a look. Here are a few your broker probably forgot to tell you about. iShares S&P National AMT-Free Municipal Bond Fund MUB: OK, MUB probably isn't one of the muni bond ETFs your broker forgot to mention and if he did, that's just weird. The iShares S&P National AMT-Free Municipal Bond Fund is home to almost $2.3 billion in assets under management and nearly 1,500 issues. The bulk of MUB's holdings are investment-grade and roughly two-thirds have maturities of 1-5 or 5-10 years. For the risk taker in you, California bonds account for almost 23% of MUB's weight. Current yield: 3.43%. Market Vectors High-Yield Municipal Index ETF HYD: The Market Vectors High-Yield Municipal Index ETF is totally different animal than MUB. Not only is HYD subject to the alternative minimum tax, the ETF allocates about 75% of its weight to non-investment grade fare. In other words, this is the junk bond ETF of the muni world. That's not a black mark by any means as HYD is up almost 9% year-to-date. Current yield: 6%. Market Vectors Short Municipal Index ETF SMB: The Market Vectors Short Municipal Index ETF is definitely an under the radar option in the muni bond ETF universe, but this fund should not be overlooked. In this case short does not mean inverse. It means most of SMB's holdings have maturities of 1-6 years. A move above $18 would extend this ETF's bullish ways. Current yield: 1.98%. SPDR Nuveen Barclays Municipal Bond ETF TFI: TFI is one for the conservative muni investor as 99% of the ETF's weight is allocated to bonds rated Aaa or Aa. The bulk of TFI's holdings range in maturity from five to 30 years. Expense ratio: 0.23%. Current yield: 3.3%. Market Vectors CEF Municipal Income ETF XMPT: No, we don't have a bias for Market Vectors, but hey, the firm knows what it's doing when it comes to muni bond funds. XMPT is the newest muni bond ETF in the Market Vectors stable, having made its debut in July. Home to 78 holdings, XMPT is sort of a fund of funds because it holds a basket of closed-end muni bond funds designed to track federally tax exempt bonds. An expense ratio of 1.43% is high, but a 30-day SEC yield of 6.22% is inviting.