At a glance
VTEB charges 0.03% a year, below the 0.21% average of the 7 funds most like it (the cheapest of 8). It has $48.52B in assets, the largest of that group; it paid 3.46% of its price in distributions over the past 12 months, monthly. Over the past year it returned +0.1% with distributions reinvested, 2nd of those 8 funds; over three years it returned +4.4% a year. At its worst it fell 11.2% in the 2022 bear market (S&P 500: 24.5%), and was back at its earlier high 24 months after the low. Its ten largest positions make up 0.9% of the fund, out of 10,591 in all.
The short version
Vanguard Tax-Exempt Bond ETF (VTEB) tracks the S&P National AMT-Free Municipal Bond Index. The index covers investment-grade bonds from US states, local governments and agencies whose interest is exempt from federal income tax and the federal alternative minimum tax. Its 0.03% expense ratio (the annual fee) is the lowest of the eight municipal bond ETFs compared; the other seven averaged 0.20%. It pays income monthly, which may appeal to taxable-account investors in higher tax brackets.
Price history
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VTEB +0.1% over the year to Oct 30, 2026, total return with distributions reinvested.
How it has behaved
| YTD | 1 yr | 3 yr | 5 yr | 10 yr | Since start | |
|---|---|---|---|---|---|---|
| VTEB official prospectus, to Dec 31, 2025 | — | +3.72% | — | +0.79% | +2.24% | — |
| VTEB price data to Oct 30, 2026 | -0.3% | +0.1% | +4.4% | +0.6% | — | +1.1% |
- Over the year to Oct 30, 2026, VTEB returned +0.1%, 2nd of 8 among similar funds.
- Its 5-year annualized return was +0.6%.
- Its worst full calendar year was 2022 (-8.0%); its best was 2023 (+6.2%).
- The deepest fall in its price history was 12.7% (Jul 22, 2021 to Oct 25, 2022), recovered by Dec 4, 2024.
Show as a table
| Year | Price data | Prospectus (official) |
|---|---|---|
| 2026 (to date) | -0.3% | — |
| 2025 | +3.8% | +3.72% |
| 2024 | +1.3% | +1.37% |
| 2023 | +6.2% | +6.20% |
| 2022 | -8.0% | -8.18% |
| 2021 | +1.1% | +1.45% |
| 2020 | — | +5.01% |
| 2019 | — | +7.50% |
| 2018 | — | +0.94% |
| 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 | Not in the price data, which starts Jun 2, 2020 |
| 2022 bear market stocks fell Jan 3, 2022 – Oct 12, 2022 | Lost 10.2% over that stretch · deepest drop along the way 11.2%, back to its old high 24.1 months after the low |
Dividends and income
Show as a table
| Year | Per share | Change |
|---|---|---|
| 2026 (to date) | $1.2700 | |
| 2025 | $1.6700 | +7.1% |
| 2024 | $1.5600 | +9.1% |
| 2023 | $1.4300 | +37.5% |
| 2022 | $1.0400 | +16.9% |
| 2021 | $0.8900 |
Living on VTEB: its income record, cuts, and how much a $1,000 monthly income takes →
What's inside
As of Jul 31, 2026, the fund held 10,591 securities; the ten largest made up 0.94% of assets.
| Holding | Weight | |
|---|---|---|
| City of New York NY Bonds and notes | 0.12% | |
| University of California Bonds and notes | 0.11% | |
| State of Idaho Bonds and notes | 0.10% | |
| State of California Bonds and notes | 0.10% | |
| State of Maryland Bonds and notes | 0.09% | |
| New York State Thruway Authority Bonds and notes | 0.09% | |
| Triborough Bridge & Tunnel Authority Bonds and notes | 0.09% | |
| Dallas Independent School District Bonds and notes | 0.08% | |
| Ohio Water Development Authority Water Pollution Control Loan Fund Bonds and notes | 0.08% | |
| Energy Northwest Class A Bonds and notes | 0.08% | |
| New York State Dormitory Authority Bonds and notes | 0.08% | |
| New Jersey Turnpike Authority Bonds and notes | 0.08% | |
| State of Illinois Bonds and notes | 0.08% | |
| Energy Northwest Class A Bonds and notes | 0.08% | |
| Kentucky State Property & Building Commission Bonds and notes | 0.08% |
By country
United States 98.93%By issuer
Municipalities 98.93%The bonds mature in 14.5 years on average (weighted by size), with an average coupon of 4.69%.
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 $3.61B (creations minus redemptions, per the N-PORT report).
- Monthly total returns reported for that quarter: +0.40%, +0.79%, -1.74%.
How it works
VTEB is an exchange-traded share class of Vanguard Tax-Exempt Bond Index Fund. It aims to track the S&P National AMT-Free Municipal Bond Index. To qualify, a bond must be rated investment grade (the higher-quality tiers) by a recognized rating agency. Its interest must also be exempt from federal income tax and the federal alternative minimum tax (AMT), a parallel tax calculation. Bonds from US territories and commonwealths are excluded.
Rather than own every bond in the index, the fund samples it, holding a mix that approximates the index's key risk factors and other traits. At least 80% of net assets normally go into index bonds. A separate policy, changeable only by shareholder vote, keeps at least 80% in securities paying income free of federal income tax, including the AMT. The fund aims to match the index's dollar-weighted average maturity, the average time until bonds are repaid, which was 13.9 years as of October 31, 2025.
As of July 31, 2026, the fund had 10,591 holdings with an average maturity of 14.5 years. The biggest, a City of New York bond, was 0.12% of assets; the top 10 made up under 1%. It may still hold a large share in one state's bonds, and index tracking could make it nondiversified, meaning heavier weights in fewer issuers.
What it really costs
- VTEB charges 0.03% a year, versus an average of 0.21% for the similar funds below (1st of 8, cheapest first).
- Of that, 0.02% is the management fee; the rest covers other fund expenses.
- Using the prospectus's standard example, $10,000 invested would cost about $3 in the first year and $39 over 10 years (assuming a 5% annual return).
| Cost of $10,000 (SEC example) | 1 yr | 3 yrs | 5 yrs | 10 yrs |
|---|---|---|---|---|
| VTEB | $3 | $10 | $17 | $39 |
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
Its main draw is monthly income exempt from federal income tax and the federal AMT, at a 0.03% expense ratio.
VTEB could supply monthly income exempt from federal income tax and the federal alternative minimum tax, an exemption most useful in a taxable account. Over the 12 months to October 27, 2026, it paid $1.69 a share, a 3.47% yield, and its expense ratio is 0.03%. It launched in 2015, so it has no 2008 record; for 2020 as a whole, the year of the COVID crash, it returned 5.01%.
Its main weak spot is interest-rate sensitivity. In the 2022 bear market it fell 11.2% and took about 24 months to recover; its deepest drop, 12.7% from July 2021 to October 2022, took about 25 months. Its worst calendar year was 2022, a loss of 8.18%. Cashing in shares during that stretch meant accepting lower prices. Past results don't predict future ones, and a plan should look at the whole portfolio, not one fund.
Who it may suit — and who should look elsewhere
May suit
- Higher-bracket taxable investors wanting monthly income exempt from federal income tax, including the alternative minimum tax; trailing yield was 3.47% as of October 27, 2026.
- Cost-focused investors: the 0.03% annual expense ratio ranks cheapest of eight comparable municipal bond funds, versus a 0.20% peer average.
- Investors wanting broad diversification: 10,591 holdings as of July 31, 2026, tracking the S&P National AMT-Free Municipal Bond Index, with no bond above 0.12%.
Look elsewhere if
- Lower-bracket investors, or those using IRAs and other tax-advantaged accounts, where the tax exemption adds little and taxable bonds typically pay higher yields.
- Savers needing steadier prices: the fund lost 8.18% in 2022; shorter-term funds like SHM (6.2-year average maturity, versus 14.5) are worth comparing.
- Residents of high-tax states wanting state as well as federal exemption; single-state funds such as iShares California Muni Bond ETF (CMF) are worth comparing.
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 |
|---|---|---|---|---|---|
| VTEB this fund | 14.5 yrs | 0.03% | $48.52B | +0.1% | +4.4% |
| TFI SPDR Nuveen Bloomberg Municipal Bond ETF | 15.1 yrs | 0.23% | $3.12B | -0.8% | +3.9% |
| MUB iShares National Muni Bond ETF | 13.5 yrs | 0.05% | $45.38B | -0.2% | +3.7% |
| CMF iShares California Muni Bond ETF | 12.4 yrs | 0.08% | $4.63B | -0.6% | +3.8% |
| JMUB JPMorgan Municipal ETF | 16.7 yrs | 0.18% | $8.75B | -0.2% | +4.4% |
| HYD VanEck High Yield Muni ETF | 19.2 yrs | 0.32% | $4.43B | +0.9% | +5.5% |
| HYMB SPDR Nuveen Bloomberg High Yield Municipal … | 20.5 yrs | 0.35% | $3.09B | -0.5% | +5.6% |
| PZA Invesco National AMT-Free Municipal Bond ETF | 22.5 yrs | 0.28% | $4.24B | -2.7% | +3.8% |
Questions investors ask
Is VTEB good for retirement income?
It can suit retirees who hold it in a taxable account. VTEB pays income monthly, and its trailing yield was 3.47% as of October 27, 2026. That income is largely free of federal income tax, which matters more the higher your tax bracket. The trade-off is price swings: the fund lost 8.18% in 2022. In an IRA or other tax-deferred account, the tax break goes unused, so taxable bond funds may be worth comparing.
Is VTEB tax free?
Largely at the federal level, but not necessarily at the state level. VTEB tracks the S&P National AMT-Free Municipal Bond Index, and under normal circumstances invests at least 80% of net assets in bonds whose interest is exempt from federal income tax, including the alternative minimum tax (AMT), a separate tax calculation that can catch higher earners. Because the bonds come from many states, state income tax may apply. Any capital gains are taxable, and the prospectus warns tax-exempt status could change, even retroactively.
What's the difference between VTEB and MUB?
They are very similar national municipal bond ETFs; the clearest difference is cost. VTEB charges 0.03% a year versus 0.05% for iShares National Muni Bond ETF (MUB). VTEB's bonds averaged 14.5 years to maturity as of July 31, 2026, against 13.5 for MUB as of August 31, 2026. As of October 27, 2026, three-year returns were 4.2% a year for VTEB and 4.0% for MUB. SPDR Nuveen Bloomberg Municipal Bond ETF (TFI) is the closest match by maturity and issuer mix but charges 0.23%.
Does VTEB pay monthly dividends?
Yes. VTEB pays income every month. In the year to October 27, 2026, it paid $1.69 per share, a trailing yield of 3.47%. Payments can vary from month to month. The prospectus notes that when interest rates fall, the fund's income may decline, partly because issuers tend to call (repay early) bonds and the fund then reinvests at lower rates. The bonds' average coupon, or stated interest rate, was 4.69% as of July 31, 2026.
How risky is VTEB?
Its price swings are modest, but it can lose money. VTEB lost 8.18% in 2022, and the prospectus lists its worst quarter as a 5.87% drop in the quarter ended March 31, 2022. From a July 2021 peak, its price fell 12.7% and took 25.3 months to recover. Its bonds averaged 14.5 years to maturity as of July 31, 2026, so rising interest rates can push prices down sharply. The index admits only investment-grade (higher-rated) bonds, which limits, but does not remove, default risk.