Municipal ETFs See Outflows as Investors Favor Short-Term Funds Amidst Losses

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Weekly Channel Summary

The Municipal ETF channel, comprising 140 funds from 49 issuers, holds a total of $220.15 billion in assets. This week, the channel experienced net outflows of $561 million, a reversal from recent trends. Despite the weekly withdrawal, year-to-date flows remain robust at $39.5 billion, and the one-year total stands at $56.5 billion in new assets.

This Week’s Performance Leaders and Laggards

All municipal bond categories posted negative returns for the week amid a challenging market environment. The Municipal – Short category proved most resilient, declining by only 0.36%, and it remains the only category with a positive year-to-date return. On the other end of the spectrum, the Municipal – Long category suffered the steepest losses, falling 1.24% for the week.

Category Performance Snapshot

Category WTD 1 Month 3 Month 6 Month YTD 1 Year
Municipal – Short -0.36% -0.46% -0.18% 0.04% 0.74% 1.16%
Municipal – Single State -0.84% -2.39% -2.75% -2.05% -1.39% 0.15%
Municipal – Intermediate -0.87% -2.36% -2.82% -2.15% -1.45% 0.18%
Municipal – High Yield -0.97% -2.53% -2.85% -0.98% -0.31% 1.39%
Municipal – Long -1.24% -3.65% -4.40% -2.82% -2.15% -0.05%

Top & Bottom 5 ETFs by Weekly Performance

In a difficult week for the asset class, the Invesco Floating Rate Municipal Income ETF (PVI) stood out with a positive return of 0.37%. This performance contrasted sharply with the broader market downturn. At the bottom of the weekly rankings, both the VanEck CEF Muni Income ETF (XMPT) and the X-Square Municipal Income ETF (ZTAX) dropped 2.28%.

Ticker Fund Name WTD Performance
Top Performers
PVI Invesco Floating Rate Municipal Income ETF 0.37%
GUMI Goldman Sachs Ultra Short Municipal Income ETF -0.02%
AMUN Abrdn Ultra Short Muncipal Income Active ETF -0.04%
FUMB First Trust Ultra Short Duration Municipal ETF -0.12%
JMST JPMorgan Ultra-Short Municipal Income ETF -0.14%
Bottom Performers
XMPT VanEck CEF Muni Income ETF -2.28%
ZTAX X-Square Municipal Income ETF -2.28%
YYYM Amplify Municipal CEF High Income ETF -2.18%
RTAI Rareview Tax Advantaged Income ETF -2.06%
MFLX First Trust Flexible Municipal High Income ETF -1.65%

Analyzing the Weekly Flows

The channel saw net outflows of $561 million, revealing a clear preference for shorter-duration assets among investors. The Municipal – Short category was the primary beneficiary, attracting $306 million in new capital. Conversely, the much larger Municipal – Intermediate category drove the overall outflow by shedding $711 million, while High Yield municipal funds also saw withdrawals of $166 million.

Category Flows Summary

Category Fund Count AUM 5 Day 30 Day 90 Day YTD 1 Year
Municipal – Short 26 $35.27B $306M $1,447M $3,258M $6,273M $9,382M
Municipal – Single State 29 $18.58B $9M $691M $2,274M $5,084M $6,352M
Municipal – Long 9 $7.30B $2M $377M $558M $3,202M $3,546M
Municipal – High Yield 19 $17.07B -$166M $260M $1,299M $2,837M $4,512M
Municipal – Intermediate 57 $141.93B -$711M $1,391M $7,480M $22,153M $32,667M

Top & Bottom 5 ETFs by 5-Day Flow

Investor demand for shorter duration was evident in fund-level flows, with the Vanguard Short-Term Tax Exempt Bond ETF (VTES) leading all funds with $158 million in new assets. The week’s outflows were concentrated in the largest broad-market funds. The Vanguard Tax-Exempt Bond ETF (VTEB) and the iShares National Muni Bond ETF (MUB) saw the largest redemptions, losing $284 million and $259 million, respectively.

Ticker Fund Name 5-Day Flow
Inflows
VTES Vanguard Short-Term Tax Exempt Bond ETF $158M
JMST JPMorgan Ultra-Short Municipal Income ETF $63M
BKMI BNY Mellon Municipal Intermediate ETF $31M
VTEC Vanguard California Tax-Exempt Bond ETF $24M
VSDM Vanguard Short Duration Tax-Exempt Bond ETF $21M
Outflows
VTEB Vanguard Tax-Exempt Bond ETF -$284M
MUB iShares National Muni Bond ETF -$259M
HYD VanEck High Yield Muni ETF -$188M
JMUB JPMorgan Municipal ETF -$152M
ITM VanEck Intermediate Muni ETF -$34M

Issuer League Table Update

iShares and Vanguard continue to dominate the municipal ETF landscape, commanding 31.57% and 25.74% of the market share, respectively. BNY Mellon led issuers in weekly inflows, albeit with a modest $44 million gain. On the other side of the ledger, iShares and VanEck experienced the largest outflows for the week, with investors pulling $223 million and $222 million from their respective fund lineups.

Top 5 Issuers by AUM

Brand Fund Count AUM AUM Market Share
iShares 10 $69.50B 31.57%
Vanguard 8 $56.66B 25.74%
JPMorgan 6 $17.44B 7.92%
Capital Group 3 $11.55B 5.25%
SPDR 4 $9.97B 4.53%

Top & Bottom 3 Issuers by 5-Day Flow

Brand 5-Day Flow
Inflows
BNY Mellon $44M
Capital Group $12M
Schwab $10M
Outflows
iShares -$223M
VanEck -$222M
JPMorgan -$91M

For a deeper dive into these trends, access our FREE, in-depth Municipal ETF reports in the right side panel of this page.

Disclosures

This material is for informational purposes only and should not be considered investment advice. All investments, including ETFs, involve risk, including the possible loss of principal. Investors should consider their investment objectives, risks, charges, and expenses carefully before investing.

This analysis was developed by the team at ETF Action. We leverage advanced AI tools to assist in the drafting and refinement of our content, based on our expert prompts, direction, and final review.