Summary:
1. Both IEI and MUB are top ETFs for bond market exposure.
2. MUB’s tax exemptions may be of strong interest for investors.
3. A comparison of cost, yield, performance, and risk highlights the differences between the two ETFs.
Article:
When it comes to gaining exposure to the bond market, investors often turn to ETFs like the iShares National Muni Bond ETF (MUB) and iShares 3-7 Year Treasury Bond ETF (IEI). These funds offer a strong portfolio of government bonds, making them popular choices among investors looking to diversify their fixed-income holdings.
In terms of cost and size, MUB boasts a lower expense ratio at 0.05% compared to IEI’s 0.15%. While IEI has a higher annual fee, it delivers a slightly higher yield and one-year return. However, MUB’s portfolio holds over 70 times more assets, making it a broader investment with a higher AUM.
Looking at performance and risk, IEI has a lower max drawdown and growth of $1,000 over five years compared to MUB. IEI focuses exclusively on U.S. Treasury bonds with minimal credit risk, while MUB spreads its assets across over 6,000 investment-grade municipal bonds, offering tax exemptions on interest earned.
For investors, the choice between IEI and MUB comes down to their risk tolerance and tax considerations. While IEI may offer better performance and lower risk with its federally-backed bonds, MUB’s tax exemptions make it an attractive option for those looking to minimize their tax liabilities. However, investors should be aware of the potential volatility and default risk associated with MUB’s lower-rated assets.
Ultimately, both IEI and MUB have their own strengths and weaknesses, and investors should carefully consider their investment goals and risk tolerance before choosing between the two ETFs.
