What are municipal bond ETFs?
Municipal bonds, or munis, are loans to US states, cities, school districts, public universities and agencies such as the New York State Thruway Authority. Their interest is generally exempt from federal income tax, and most of these ETFs aim to pass that tax-exempt income on to shareholders. They spread their money very thinly. VTEB holds 10,591 bonds, and its largest position, City of New York bonds, is 0.12% of assets. No single bond shows up across most of the largest funds, but some issuers recur. State of California bonds rank among the five largest positions in VTEB, SUB, SHM, TFI and VTES. University of California bonds do the same in VTEB, SUB, CMF and TFI.
Most of the largest funds track an index of investment-grade bonds, which are bonds rated as having a relatively low risk of default. The real differences are maturity, credit quality and geography. SUB, VTES and SHM hold shorter-term bonds, and JMST goes shorter still, which limits price swings. PZA tracks a long-term ICE BofA index. HYD and HYMB track high-yield indexes of lower-rated bonds that pay more in return for more risk. Puerto Rico sales tax bonds and tobacco settlement bonds are among their largest positions. CMF holds only California bonds. JMUB, JMST, MUNI, FLMI and DFNM are run by managers who pick bonds rather than follow an index. None of the 64 funds is leveraged or inverse.
The expense ratio is the yearly fee taken from fund assets. The median is 0.27%. VTEB is the cheapest at 0.03%, followed by MUB and VTES at 0.05%. Many others charge more: 0.18% for JMUB and JMST, 0.32% for HYD, and 0.35% for HYMB and MUNI. The highest in the group is 3.4%.
Money is concentrated in a few funds. The five largest, VTEB, MUB, SUB, JMUB and JMST, hold 66.9% of the group's assets.
The largest municipal bond ETFs, side by side
Swipe the table to see all 5 funds.
| VTEB | MUB | SUB | JMUB | JMST | |
|---|---|---|---|---|---|
| Net assets | $48.52B | $45.38B | $11.64B | $8.75B | $7.36B |
| Expense ratio | 0.03% | 0.05% | 0.07% | 0.18% | 0.18% |
| Holdings | 10,591 | 7,002 | 2,942 | 1,986 | 1,454 |
| In the 10 largest | 0.94% | 1.31% | 2.49% | 5.21% | 6.3% |
| Biggest holding | City of New York NY (0.12%) | Board of Regents of the University of Texas System (0.18%) | New Jersey Economic Development Authority (0.35%) | District of Columbia Income Tax Revenue (0.69%) | State of Washington (0.77%) |
| Yield | 3.46% | 3.3% | 2.56% | 3.5% | 2.57% |
| 1-year return | +0.1% | -0.2% | +2.1% | -0.2% | +2.5% |
| 3 years, a year | +4.4% | +3.7% | +3.3% | +4.4% | +3.3% |
| 5 years, a year | +0.6% | +0.6% | +1.6% | +1.0% | +2.5% |
| Worst drop, past year | -6.6% | -6.3% | -1.9% | -5.9% | -0.6% |
| Launched | 2015 | 2007 | 2008 | 2018 | 2018 |
The largest ordinary funds by net assets (leveraged and inverse funds are listed further down). Holdings from each fund’s latest N-PORT report; returns include reinvested distributions, as of Nov 2, 2026.
Head to head
VTEB vs MUB
VTEB and MUB both track indexes of investment-grade US munis and spread money thinly. VTEB holds 10,591 bonds with 0.94% in its top 10, while MUB holds 7,002 with 1.31%. Only 3.8% of their assets overlap, the most of any pair among the five largest funds. VTEB costs 0.03% a year and MUB 0.05%. As of November 2, 2026, they yielded 3.46% and 3.3%. One-year returns were 0.1% and -0.2%, with worst drops of 6.6% and 6.3%. Either may suit investors wanting broad, low-cost tax-exempt income.
SUB vs JMST
Both hold short-dated munis to limit price swings. SUB tracks an index of investment-grade bonds maturing in one month to five years. It costs 0.07% and puts 2.49% of assets in its top 10. JMST follows no index. Its managers aim for tax-exempt income with a relatively stable value, it charges 0.18%, and it holds 6.3% in its top 10. They share 0.9% of assets. As of November 2, 2026, JMST returned 2.5% over one year (worst drop 0.6%) and SUB 2.1% (worst drop 1.9%). Both may suit investors who value stability over yield.
VTEB vs JMUB
VTEB is a 0.03% index fund spread across 10,591 bonds. JMUB charges 0.18% and has managers pick its 1,986 bonds. It holds 5.21% in its top 10, and District of Columbia income tax revenue bonds are its largest position at 0.69%. Just 0.9% of their assets overlap. As of November 2, 2026, their yields were close: 3.46% for VTEB and 3.5% for JMUB. Three-year returns were 4.4% for both. One-year returns were 0.1% and -0.2%, with worst drops of 6.6% and 5.9%. JMUB may suit those wanting active selection, VTEB those focused on cost.
How much do the largest municipal bond ETFs overlap?
Owning two funds that hold the same stocks adds little diversification. Overlap here is the share of assets two funds have in common: for each stock both own, the smaller of its two weights, added up.
| Funds | Assets in common | Shared holdings | |
|---|---|---|---|
| VTEB and MUB | 3.8% | 89 | |
| VTEB and SUB | 2.1% | 47 | |
| MUB and SUB | 2% | 39 | |
| JMUB and JMST | 1.5% | 14 | |
| VTEB and JMUB | 0.9% | 23 | |
| SUB and JMST | 0.9% | 16 | |
| MUB and JMUB | 0.7% | 12 | |
| VTEB and JMST | 0.5% | 12 | |
| SUB and JMUB | 0.4% | 5 | |
| MUB and JMST | 0.2% | 5 |
From each fund’s full holdings in its latest N-PORT report.
How have municipal bond ETFs performed?
The five largest ordinary funds: growth from the start of the range, distributions reinvested. The dashed gray line is the S&P 500 (SPY).
Best-performing municipal bond ETFs over the past year
| # | Fund | Net assets | Cost | 1 mo | YTD | 1 yr | 3 yr |
|---|---|---|---|---|---|---|---|
| 1 | FUMB First Trust Ultra Short Duration Municipal ETF | $246.5M | 0.45% | +0.8% | +2.2% | +3.0% | +3.1% |
| 2 | IBMO iShares iBonds Dec 2026 Term Muni Bond ETF | $576.0M | 0.18% | +0.2% | +1.8% | +2.6% | +3.5% |
| 3 | JMST JPMorgan Ultra-Short Municipal Income ETF | $7.36B | 0.18% | +0.9% | +1.9% | +2.5% | +3.3% |
| 4 | IBMP iShares iBonds Dec 2027 Term Muni Bond ETF | $655.5M | 0.18% | +0.7% | +1.7% | +2.4% | +3.7% |
| 5 | SHYD VanEck Short High Yield Muni ETF | $450.4M | 0.32% | +2.9% | +1.2% | +2.4% | +5.1% |
| 6 | SMMU PIMCO Short Term Municipal Bond Active ETF | $1.14B | 0.35% | +2.0% | +1.8% | +2.3% | +4.1% |
| 7 | BSMQ Invesco BulletShares 2026 Municipal Bond ETF | $268.5M | 0.18% | +0.4% | +1.5% | +2.1% | +3.7% |
| 8 | SMB VanEck Short Muni ETF | $311.5M | 0.07% | +2.1% | +1.2% | +2.1% | +3.7% |
| 9 | SUB iShares Short-Term National Muni Bond ETF | $11.64B | 0.07% | +1.7% | +1.2% | +2.1% | +3.3% |
| 10 | BSMR Invesco BulletShares 2027 Municipal Bond ETF | $357.8M | 0.18% | +1.2% | +1.5% | +2.0% | +4.0% |
Funds with at least $25 million in net assets; leveraged and inverse funds left out. Past returns don’t predict future returns.
How municipal bond ETFs did in past market crashes
| Fund | 2008 crash | 2020 crash | 2022 drop |
|---|---|---|---|
| VTEB | not yet launched | not yet launched | -10.2% |
| MUB | +3.6% | -9.9% | -9.5% |
| SUB | not yet launched | -6.8% | -3.5% |
| JMUB | not yet launched | -11.0% | -10.0% |
| JMST | not yet launched | -1.1% | -0.9% |
| S&P 500 (SPY) | -55.2% | -33.7% | -24.5% |
Total return from the stock market’s peak to its low in each fall, distributions reinvested.
What drives municipal bond ETFs?
Municipal bond prices move mainly with interest rates. When rates rise, existing bonds that pay lower interest become less valuable, so their prices fall. Bonds with longer maturities fall more. That is why short-term funds such as JMST and SUB swing less than broad funds such as VTEB and MUB. Credit quality matters too. Munis are repaid from taxes, tolls, tuition or hospital revenue, so a weaker local economy or budget can hurt prices, especially for the lower-rated bonds in HYD and HYMB. Income tax rates also shape demand, because the tax exemption is worth more when tax rates are higher.
These funds have held up far better than stocks in past downturns. In the 2008 financial crisis, MUB gained 3.6% while the S&P 500 fell 55.2%. In the 2020 COVID crash, MUB fell 9.9% and JMUB 11%, against 33.7% for the S&P 500, while JMST slipped just 1.1%. In the 2022 bear market, rising rates hit bonds and stocks together. VTEB fell 10.2%, JMUB 10% and MUB 9.5%, compared with 24.5% for the S&P 500. Short-term SUB lost 3.5% and JMST 0.9%.
Municipal bond ETFs with the lowest expense ratios
| # | Fund | Expense ratio | On $10,000 | Net assets |
|---|---|---|---|---|
| 1 | VTEB Vanguard Tax-Exempt Bond ETF | 0.03% | $3 a year | $48.52B |
| 2 | MUB iShares National Muni Bond ETF | 0.05% | $5 a year | $45.38B |
| 3 | VTES Vanguard Short-Term Tax Exempt Bond ETF | 0.05% | $5 a year | $2.42B |
| 4 | SUB iShares Short-Term National Muni Bond ETF | 0.07% | $7 a year | $11.64B |
| 5 | SMB VanEck Short Muni ETF | 0.07% | $7 a year | $311.5M |
Ordinary funds with at least $10 million in net assets. The median ordinary municipal bond ETF charges 0.27% a year; leveraged and inverse funds usually charge more.
Do municipal bond ETFs pay dividends?
63 of the 64 ordinary municipal bond ETFs with a page here paid distributions over the last 12 months, with a median yield of 3.46%.
| Highest yields | Yield | Net assets |
|---|---|---|
| XMPT VanEck CEF Muni Income ETF | 7.02% | $219.5M |
| OVM Overlay Shares Municipal Bond ETF | 5.2% | $44.8M |
| FMHI First Trust Municipal High Income ETF | 5% | $994.3M |
| HYMB SPDR Nuveen Bloomberg High Yield Municipal Bo… | 4.88% | $3.09B |
| HYD VanEck High Yield Muni ETF | 4.47% | $4.43B |
Distributions over the last 12 months divided by the price; funds with at least $25 million in net assets.
How to choose a municipal bond ETF
- Costs range from 0.03% to 3.4%. VTEB charges 0.03% a year, MUB and VTES 0.05%, and SUB and SMB 0.07%. Actively managed JMUB and JMST charge 0.18%. High-yield HYD and HYMB charge 0.32% and 0.35%. The median is 0.27%.
- Short-term funds trade yield for stability. SUB holds bonds maturing within five years and VTES within seven, and JMST is ultra-short. As of November 2, 2026, JMST yielded 2.57% with a worst one-year drop of 0.6%. Broad VTEB yielded 3.46% and dropped 6.6%.
- Investment grade or high yield. Most large funds hold investment-grade bonds. HYD and HYMB track high-yield indexes of lower-rated bonds and carry more credit risk. As of November 2, 2026, they yielded 4.47% and 4.88%, against a group median of 3.46%.
- Index tracking or manager selection. VTEB, MUB and TFI track indexes, and VTEB's top 10 holdings are 0.94% of assets. Managers pick bonds at JMUB, MUNI and FLMI. FLMI's top 10 is 14.31%, and MUNI's largest positions are US Treasuries.
- National or single-state. CMF holds only California bonds. Interest from in-state munis is often exempt from state income tax as well as federal, which can matter for that state's residents. The trade-off is reliance on one state's finances.
- Exposure to the alternative minimum tax. The alternative minimum tax is a parallel federal tax that catches some higher earners. JMUB's stated objective warns its income may not be exempt from it. PZA, Invesco's National AMT-Free fund, aims to avoid it.
What are the risks of municipal bond ETFs?
- Rising rates cut bond prices. PZA, which tracks long-term bonds, had one-year price volatility of 5% and fell as much as 9.3% in the year to November 2, 2026. In the 2022 bear market, VTEB lost 10.2%. Longer maturities swing more when rates move.
- Credit risk in high-yield funds. HYD and HYMB hold lower-rated bonds with higher default risk. Puerto Rico bonds make up most of HYMB's five largest positions, the biggest at 2.49%. HYMB fell as much as 7.5% in the year to November 2, 2026.
- Sector bets in active funds. FLMI puts 14.31% of assets in its top 10. All five of its largest positions are energy-related issuers such as the Public Energy Authority of Kentucky. VTEB's top 10, by contrast, is 0.94%.
- Single-state funds rely on one budget. CMF holds only California bonds, such as Los Angeles Unified School District debt, so trouble in one state's budget hits the whole fund. Broad funds such as VTEB and MUB spread risk across many issuers.
- The tax break may not apply. The tax exemption is worth most to people in higher tax brackets. Inside a tax-deferred account such as an IRA it adds nothing, and munis' lower yields may trail taxable bonds. Capital gains are still taxed.
List of all municipal bond ETFs, by size
| # | Fund | Net assets | Cost | Yield | YTD | 1 yr | 5 yr |
|---|---|---|---|---|---|---|---|
| 1 | VTEB Vanguard Tax-Exempt Bond ETF | $48.52B† | 0.03% | 3.46% | -0.3% | +0.1% | +0.6% |
| 2 | MUB iShares National Muni Bond ETF | $45.38B | 0.05% | 3.3% | -0.6% | -0.2% | +0.6% |
| 3 | SUB iShares Short-Term National Muni Bond ETF | $11.64B | 0.07% | 2.56% | +1.2% | +2.1% | +1.6% |
| 4 | JMUB JPMorgan Municipal ETF | $8.75B | 0.18% | 3.5% | -0.5% | -0.2% | +1.0% |
| 5 | JMST JPMorgan Ultra-Short Municipal Income ETF | $7.36B | 0.18% | 2.57% | +1.9% | +2.5% | +2.5% |
| 6 | CMF iShares California Muni Bond ETF | $4.63B | 0.08% | 3.02% | -1.0% | -0.6% | +0.4% |
| 7 | HYD VanEck High Yield Muni ETF | $4.43B | 0.32% | 4.47% | 0.0% | +0.9% | -0.4% |
| 8 | PZA Invesco National AMT-Free Municipal Bond ETF | $4.24B | 0.28% | 4.02% | -2.5% | -2.7% | -0.8% |
| 9 | SHM SPDR Nuveen Bloomberg Short Term Municipal Bond E… | $3.47B | 0.2% | 2.72% | +0.8% | +1.2% | +1.0% |
| 10 | TFI SPDR Nuveen Bloomberg Municipal Bond ETF | $3.12B | 0.23% | 3.66% | -1.1% | -0.8% | -0.4% |
Questions investors ask about municipal bond ETFs
What is the largest municipal bond ETF?
VTEB, the Vanguard Tax-Exempt Bond ETF, is the largest, narrowly ahead of MUB, the iShares National Muni Bond ETF. Both track indexes of investment-grade US munis at very low cost: 0.03% a year for VTEB and 0.05% for MUB. SUB, JMUB and JMST complete the five largest. Together these five hold 66.9% of the assets in all 64 municipal bond ETFs.
What is the cheapest municipal bond ETF?
VTEB has the lowest expense ratio, at 0.03% a year. MUB and VTES, Vanguard's short-term fund, charge 0.05%. SUB and SMB, the VanEck Short Muni ETF, charge 0.07%. That compares with a median of 0.27% across the group. The expense ratio is only part of the cost; trading costs and how closely a fund follows its index also matter.
VTEB vs MUB: what is the difference?
They are similar but not identical. Both track indexes of investment-grade US munis. VTEB costs 0.03% and holds 10,591 bonds, while MUB costs 0.05% and holds 7,002. Only 3.8% of their assets overlap. As of November 2, 2026, VTEB yielded 3.46% and MUB 3.3%. One-year returns were 0.1% and -0.2%, and five-year returns were 0.6% for both. MUB has a longer record: it launched in 2007, VTEB in 2015.
Do municipal bond ETFs pay dividends?
Yes. 63 of the 64 funds pay dividends, and the median yield was 3.46% as of November 2, 2026. That income is generally exempt from federal income tax. The highest yield, 7.02%, came from XMPT, the VanEck CEF Muni Income ETF, which also had the group's weakest one-year return at -3.6%. High-yield HYMB yielded 4.88% and HYD 4.47%, while short-term SUB yielded 2.56%.
Are municipal bond ETFs tax free?
Mostly, at the federal level. Interest on municipal bonds is generally exempt from federal income tax, and funds such as SHM and TFI aim to pass on that tax-exempt income. There are limits. JMUB's objective notes that some income may not escape the alternative minimum tax, a parallel tax that catches some higher earners. PZA is an AMT-free fund. Your state usually taxes income from out-of-state bonds, capital gains are taxable, and inside an IRA the exemption adds nothing.
Do municipal bond ETFs own California bonds?
Yes, though in small slices. State of California bonds rank among the five largest holdings of VTEB, SUB, SHM, TFI and VTES. University of California bonds rank among those of VTEB, SUB, CMF and TFI. In VTEB, State of California bonds make up just 0.1% of assets. CMF, the iShares California Muni Bond ETF, holds only investment-grade California munis and charges 0.08% a year.
How many municipal bond ETFs are there?
There are 64 US-listed municipal bond ETFs. None is leveraged or inverse, so none tries to deliver a multiple or the opposite of a market's daily move. Money is concentrated: VTEB, MUB, SUB, JMUB and JMST hold 66.9% of the assets. The rest range from California-only CMF to high-yield HYD and HYMB and actively managed funds such as MUNI and FLMI.
Municipal bond ETF vs mutual fund: what is the difference?
Both pool many bonds and pass on the interest. ETF shares trade on an exchange throughout the day at market prices. Mutual fund shares are priced once a day after the market closes. The two can share a portfolio. VTEB is an exchange-traded share class of Vanguard Tax-Exempt Bond Index Fund, so its ETF and mutual fund shareholders own the same bonds.
Is there a Vanguard, Fidelity or Schwab municipal bond ETF?
Yes. Vanguard offers 3: VTEB (Vanguard Tax-Exempt Bond ETF), VTES (Vanguard Short-Term Tax Exempt Bond ETF), VSDM (Vanguard Short Duration Tax-Exempt Bond ETF). Fidelity and Schwab don’t have a municipal bond ETF.
