At a glance
FSMB charges 0.55% a year, above the 0.18% average of the 7 funds most like it (the most expensive of 8). It has $621.7M in assets, the 8th largest of that group; it paid 3.29% of its price in distributions over the past 12 months, monthly. Over the past year it returned +1.7% with distributions reinvested, 3rd of those 8 funds; over three years it returned +3.8% a year. At its worst it fell 6.3% in the 2020 crash (S&P 500: 33.7%) and 5.7% in the 2022 bear market (S&P 500: 24.5%), and was back at its earlier high 4 months and 21 months after the lows. Its ten largest positions make up 7.0% of the fund, out of 551 in all.
The short version
First Trust Short Duration Managed Municipal ETF (FSMB) is an actively managed fund of municipal bonds whose interest is exempt from regular federal income tax. It aims to keep the portfolio's duration, a measure of sensitivity to interest rates, at 1–3 years, and it can put up to 35% in lower-rated bonds. Its 0.55% annual expense ratio is the highest among similar muni ETFs, which average 0.18%.
Price history
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FSMB +1.7% over the year to Oct 27, 2026, total return with distributions reinvested.
How it has behaved
| YTD | 1 yr | 3 yr | 5 yr | 10 yr | Since start | |
|---|---|---|---|---|---|---|
| FSMB official prospectus, to Dec 31, 2024 | — | +2.40% | — | +1.34% | — | +1.86% |
| FSMB price data to Oct 27, 2026 | +1.0% | +1.7% | +3.8% | +1.5% | — | +2.1% |
- Over the year to Oct 27, 2026, FSMB returned +1.7%, 3rd of 8 among similar funds.
- Its 5-year annualized return was +1.5%.
- In the 2020 COVID crash it fell 6.3% and regained its old high 3.9 months after the low.
- Its worst full calendar year was 2022 (-3.7%); its best was 2025 (+4.4%).
- The deepest fall in its price history was 6.3% (Mar 6, 2020 to Mar 20, 2020), recovered by Jul 17, 2020.
Show as a table
| Year | Price data | Prospectus (official) |
|---|---|---|
| 2026 (to date) | +1.0% | — |
| 2025 | +4.4% | — |
| 2024 | +2.4% | +2.40% |
| 2023 | +3.5% | +3.44% |
| 2022 | -3.7% | -3.84% |
| 2021 | +1.3% | +1.40% |
| 2020 | +3.5% | +3.47% |
| 2019 | +3.9% | +3.82% |
| 2008 financial crisis stocks fell Oct 9, 2007 – Mar 9, 2009 | Before this security existed |
|---|---|
| 2020 COVID crash stocks fell Feb 19, 2020 – Mar 23, 2020 | Lost 3.7% over that stretch · deepest drop along the way 6.3%, back to its old high 3.9 months after the low |
| 2022 bear market stocks fell Jan 3, 2022 – Oct 12, 2022 | Lost 5.1% over that stretch · deepest drop along the way 5.7%, back to its old high 20.5 months after the low |
Dividends and income
Show as a table
| Year | Per share | Change |
|---|---|---|
| 2026 (to date) | $0.5000 | |
| 2025 | $0.6500 | +12.1% |
| 2024 | $0.5800 | +20.8% |
| 2023 | $0.4800 | +60.0% |
| 2022 | $0.3000 | +15.4% |
| 2021 | $0.2600 | -29.7% |
| 2020 | $0.3700 | -22.9% |
| 2019 | $0.4800 |
What's inside
As of Jul 31, 2026, the fund held 551 securities; the ten largest made up 7% of assets.
| Holding | Weight | |
|---|---|---|
| SOUTHEAST ENERGY AUTHORITY (AL) Bonds and notes | 1.01% | |
| OHIO AIR QUALITY DEVELOPMENT AUTHORITY (OH) Bonds and notes | 0.77% | |
| DALLAS & FORT WORTH CITIES TEXAS INTERNATIONAL AIRPORT (TX) Bonds and notes | 0.69% | |
| PUBLIC FINANCE AUTHORITY (WI) Bonds and notes | 0.69% | |
| COLORADO HEALTH FACILITIES AUTHORITY (CO) Bonds and notes | 0.68% | |
| MARATHON OIL CORP Bonds and notes | 0.66% | |
| UTAH (UT), COUNTY OF Bonds and notes | 0.64% | |
| PUBLIC ENERGY AUTHORITY OF KENTUCKY (KY) Bonds and notes | 0.63% | |
| MAIN STR ENERGY INC GA Bonds and notes | 0.62% | |
| BURKE COUNTY DEVELOPMENT AUTHORITY (GA) Bonds and notes | 0.61% | |
| PALM BEACH COUNTY HEALTH FACILITIES AUTHORITY (FL) Bonds and notes | 0.60% | |
| NEW YORK CITY MUNICIPAL WATER FINANCE AUTHORITY (NY) Bonds and notes | 0.56% | |
| PUBLIC ENERGY AUTHORITY OF KENTUCKY (KY) Bonds and notes | 0.56% | |
| BLACK BELT ENERGY GAS DISTRICT (THE) (AL) Bonds and notes | 0.55% | |
| BLACK BELT ENERGY GAS DIST ALA Bonds and notes | 0.54% |
By country
United States 99.02%By issuer
Municipalities 99.02%The bonds mature in 11.7 years on average (weighted by size), with an average coupon of 4.32%.
Source: N-PORT holdings report as of Jul 31, 2026. Cash, money-market funds and derivatives are shown separately from the securities list.What changed recently
- Over the three months to Jul 31, 2026, investors added a net $26.0M (creations minus redemptions, per the N-PORT report).
- Monthly total returns reported for that quarter: +0.27%, +0.42%, -0.44%.
How it works
FSMB does not track an index. First Trust's managers pick bonds, seeking income free from regular federal income tax while preserving capital. At least 80% of net assets goes into municipal bonds from states, cities and their agencies. Managers favor issuers that provide basic infrastructure or critical services across at least 10 states, leaning toward states with growing populations and healthy job markets.
Duration measures how much bond prices react to interest-rate changes. Managers keep average duration between 1 and 3 years, so a 1% rate rise would be expected to lower the fund's value about 1% to 3%. They estimate duration by modeling each bond's cash flows, including early repayments and interest resets on variable-rate bonds. That helps explain why average maturity (11.7 years as of July 31, 2026) can far exceed duration.
Most bonds must be investment grade (rated BBB-/Baa3 or better) when bought, but up to 35% of net assets can be lower-rated "junk" bonds. Some interest may be subject to the alternative minimum tax, a parallel federal tax. As of July 31, 2026, the fund held 551 bonds; the largest, a Southeast Energy Authority (Alabama) bond, was about 1% of assets. When dealers create or redeem shares, the fund often uses cash, which can force bond sales and reduce tax efficiency.
What it really costs
- FSMB charges 0.55% a year, versus an average of 0.18% for the similar funds below (8th of 8, cheapest first).
Structure and tax notes
- Bond prices move opposite to interest rates; the longer the maturities it holds, the more its price reacts to rate changes.
In a retirement portfolio
It aims for tax-exempt income with capital preservation, and its short duration has kept price swings small.
FSMB could hold money a retiree expects to spend in the next few years, while paying income exempt from regular federal income tax. It launched in November 2018, so it has no 2008 record. Its deepest drop came in the 2020 COVID crash: it fell 6.3% from March 6 to March 20, 2020, and recovered by July 17, 2020, about four months later. In the 2022 rate-driven sell-off it fell 5.7% and took 20.5 months, until June 12, 2024, to recover. 2022 was also its worst calendar year, at -3.84%. Anyone who had to sell in a bad year would have taken a small loss, but it was not a quick rebound in 2022.
The trailing 12-month yield was 3.29% as of October 27, 2026, paid monthly. The 0.55% expense ratio takes a bigger share of that income than at most similar funds. Past results don't predict the future, and a plan should look at the whole portfolio, not one fund.
Who it may suit — and who should look elsewhere
May suit
- Taxable-account investors seeking monthly income exempt from regular federal income tax; the trailing yield was 3.29% as of October 27, 2026.
- Savers holding near-term spending money who want a manager targeting a 1–3 year duration to limit losses when rates rise.
- Investors who prefer active bond picking across 551 holdings in at least 10 states, focused on infrastructure and essential services.
Look elsewhere if
- Cost-focused investors: its 0.55% expense ratio ranks last of eight similar funds, against 0.03% for VTEB and 0.05% for MUB.
- Investors who want only investment-grade bonds, since up to 35% of assets may go into high-yield or "junk" municipal bonds.
- Investors holding bonds in IRAs or other tax-advantaged accounts, where tax-exempt interest adds no benefit, or anyone sensitive to alternative minimum tax bonds.
Close alternatives
Matched by bond funds with the closest average maturity and issuer mix (N-PORT).
| Fund | Avg. maturity | Cost | Net assets | 1 yr | 3 yr |
|---|---|---|---|---|---|
| FSMB this fund | 11.7 yrs | 0.55% | $621.7M | +1.7% | +3.8% |
| CMF iShares California Muni Bond ETF | 12.4 yrs | 0.08% | $4.63B | -0.6% | +3.8% |
| MUB iShares National Muni Bond ETF | 13.5 yrs | 0.05% | $45.38B | -0.2% | +3.7% |
| VTEB Vanguard Tax-Exempt Bond ETF | 14.5 yrs | 0.03% | $48.52B | +0.1% | +4.4% |
| TAFI AB Tax-Aware Short Duration Municipal ETF | 8.7 yrs | 0.27% | $1.38B | +1.6% | +3.9% |
| TFI SPDR Nuveen Bloomberg Municipal Bond ETF | 15.1 yrs | 0.23% | $3.12B | -0.8% | +3.9% |
| MEAR iShares Short Maturity Municipal Bond Activ… | 13.1 yrs | 0.25% | $1.36B | +1.9% | +3.3% |
| SMMU PIMCO Short Term Municipal Bond Active ETF | 13.9 yrs | 0.35% | $1.14B | +2.3% | +4.1% |
Questions investors ask
Is FSMB interest tax-free?
Mostly, at the federal level. At least 80% of net assets go into municipal bonds whose interest is exempt from regular federal income tax. But the fund can hold private activity and other bonds whose interest may be subject to the federal alternative minimum tax. The fund also settles most share redemptions in cash, which can make it less tax-efficient than ETFs that trade in kind. Gains from selling shares are taxable. State tax treatment depends on where the investor lives.
Does FSMB pay monthly dividends?
Yes. FSMB pays income monthly. Over the 12 months to October 27, 2026, it paid about $0.65 per share, a trailing yield of 3.29%. That income comes from the interest on its municipal bonds, which averaged a 4.32% coupon as of July 31, 2026. Payments can rise or fall as the managers buy and sell bonds and as interest rates change, so past payouts don't guarantee future ones.
What is FSMB's expense ratio?
FSMB's expense ratio is 0.55% a year, according to its prospectus filed November 28, 2025. That is the full management fee, with no waiver. It is the highest among eight comparable municipal bond ETFs, which average 0.18%. Broad index funds charge far less: VTEB charges 0.03% and MUB 0.05%. Active short-duration funds TAFI and SMMU charge 0.27% and 0.35%. On a bond fund, that gap comes straight out of the yield.
FSMB vs TAFI: which short-duration muni ETF is cheaper?
TAFI, the AB Tax-Aware Short Duration Municipal ETF, is cheaper at 0.27% a year, against FSMB's 0.55%. Both focus on short-duration municipal bonds. Price returns as of October 27, 2026 were close: over one year, 1.7% for FSMB and 1.6% for TAFI; over three years, 3.8% and 3.9% a year. TAFI is larger, with about $1.38 billion in net assets as of August 31, 2026, against FSMB's $622 million as of July 31, 2026.
Can FSMB lose money?
Yes. Its prospectus warns that investors could lose money, and it has had losses. FSMB lost 3.84% in calendar 2022, when interest rates rose sharply, and its worst quarter was -3.39% in early 2022. From January to September 2022 it fell 5.7% and did not recover until June 2024. Its deepest drop was 6.3% in March 2020. Up to 35% of the fund can be in high-yield bonds, which adds credit risk on top of interest-rate risk.