Invesco Taxable Municipal Bond ETF

Invesco Taxable Municipal Bond ETF (BAB) tracks the ICE BofA US Taxable Municipal Securities Plus Index. The index holds investment-grade bonds from US states, cities and public agencies that pay taxable interest, including Build America Bonds. Most muni funds pay tax-free income, but BAB's income is taxable. It yielded 4.42% over the 12 months to October 27, 2026. Its 0.28% yearly cost is above the 0.23% average for muni ETFs with similar maturities.

• Over the year to Oct 27, 2026, BAB returned -2.4%, 8th of 8 among similar funds.
• Its 5-year annualized return was -1.2% and its 10-year +2.0%.
• In the 2020 COVID crash it fell 27.8% and regained its old high 10.3 months after the low.
• Its worst full calendar year was 2022 (-19.5%); its best was 2011 (+21.1%).
• The deepest fall in its price history was 27.8% (Mar 9, 2020 to Mar 19, 2020), recovered by Jan 27, 2021.

As of May 31, 2026, the fund held 1,866 securities; the ten largest made up 8.65% of assets.

The bonds mature in 14.2 years on average (weighted by size), with an average coupon of 4.47%.

• Over the three months to May 31, 2026, investors added a net $38.6M (creations minus redemptions, per the N-PORT report).
• Monthly total returns reported for that quarter: -2.51%, -0.03%, +0.29%.

BAB follows an index run by ICE Data Indices. The index covers taxable municipal bonds, which are loans to US states, territories and their local governments. To qualify, a bond must have a fixed coupon (zero-coupon bonds count) and at least one year left until it matures. It must also be investment grade, meaning a strong credit rating based on the average of Moody's, S&P and Fitch. Each bond also needs a minimum amount outstanding: $10 million for 1–5 year bonds, $15 million for 5–10 years and $25 million for 10 years or more. The index leaves out insured bonds, privately placed Rule 144A bonds and bonds in default.

The index can include Build America Bonds. These are taxable munis from a 2009 federal program in which Washington pays part of the issuer's interest. Bonds are weighted by market value, so the largest issues count most. As of October 31, 2025, the index had 4,357 bonds. The fund uses "sampling": it buys a representative slice rather than every bond. As of May 31, 2026, it held 1,866 bonds, and its turnover was 6%.

Holders should understand three things. The average maturity of 14.2 years makes the price sensitive to interest rates. A large share of the fund is in California bonds. And a Build America Bond issuer that breaks the program's rules could lose its federal subsidy.

• BAB charges 0.28% a year, versus an average of 0.23% for the similar funds below (6th of 8, cheapest first).
• Using the prospectus's standard example, $10,000 invested would cost about $29 in the first year and $355 over 10 years (assuming a 5% annual return).

BAB pays monthly income from high-quality state and local bonds, but that income is taxable and its long maturities make its price sensitive to interest rates.

BAB pays income every month. Its trailing 12-month yield was 4.42% as of October 27, 2026. The drawback is rate sensitivity. The fund lost 19.4% in 2022, its worst calendar year, as rates rose. A 20.4% decline from January 3 to September 27, 2022 had not been recovered by October 27, 2026. In March 2020, its price fell 27.8% in 10 days and took about 10 months to recover. The fund launched in 2009, so it has no record from the 2008 crisis. A retiree who needed to sell shares in a year like 2022 would have locked in losses. Costs are $29 in the first year on $10,000 under the SEC's standard example. Past results don't predict the future, and a plan should look at the whole portfolio, not one fund.

Matched by bond funds with the closest average maturity and issuer mix (N-PORT).