MUB Profile
The iShares National Muni Bond ETF is designed to provide investors with exposure to a diversified portfolio of municipal bonds whose interest income is exempt from federal income taxes. The fund maintains a strategy of investing at least 80% of its assets in the securities that are part of its underlying index. Additionally, it allocates at least 90% of its assets to fixed-income securities that align with the characteristics of the underlying index, aiming to effectively mirror its performance.
The underlying index comprises municipal bonds that offer tax-exempt interest income at the federal level, excluding those subject to the alternative minimum tax (AMT). By focusing on these tax-advantaged securities, the fund seeks to provide investors with a stable source of income while minimizing tax liability. This approach is particularly attractive to investors in higher tax brackets seeking to enhance their after-tax returns.
Municipal bonds included in the index are issued by various state and local government entities, and are typically used to fund public projects such as infrastructure, schools, and healthcare facilities. The fund’s holdings are selected based on criteria that ensure they align with the fund’s objective of tracking the performance of the underlying index, which includes a range of bond maturities and credit qualities to diversify risk.
Investors should note that while municipal bonds are generally considered lower risk compared to other fixed-income securities, they are not entirely free from risk. Factors such as changes in interest rates, credit quality of issuers, and economic conditions can impact the performance of the fund. The iShares National Muni Bond ETF is suitable for investors seeking a tax-efficient income stream with a focus on U.S. municipal bonds, while accepting the associated market and credit risks.
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