Categories: Bond ETFsExchange Traded Funds (ETFs)Investing StrategiesU.S. Investing

Consider Low-Risk, Reliable Income Municipal Bonds

Government bonds have historically been sources of low-risk, reliable income for investors.

However, since the COVID-19 pandemic, the yields of government bonds have not been favorable, and rising interest rates have made those yields all the more unattractive. Yet, 2023 looks to be the year bonds make a comeback.

Bond yields have been on the rise and are likely to remain high through the first half of 2023. With these favorable conditions, it makes sense to explore opportunities presented by bonds.

One potential avenue into this market is the VanEck Long Muni ETF (MLN). This fund is managed by Van Eck Associates Corporation, and seeks to replicate the price and yield performance of the ICE Long AMT-Free Broad National Municipal Index (MBNL) as closely as possible.

MLN focuses exclusively on U.S. alternative minimum tax (AMT)-free, long-dated municipal bonds, while still trying to capture a full range of issuers and market sectors. The fund weights constituents by market value and mainly includes investment grade bonds with high overall credit quality.

Normally, the fund invests about 80% of its total assets in fixed income securities. The fund uses a sampling method in tracking the index, meaning that it will invest in a sample of securities that collectively have an investment profile similar to that of the underlying index.

In spite of its specifications, the fund boasts a diverse portfolio, with top holdings including bonds of The New Jersey State Turnpike Authority, The Massachusetts Development Finance Agency, the Kentucky Bond Development Corp and the State Of Illinois. Its investment pool is also attractive for specializing in areas that will always have a good degree of security.

Chart courtesy of StockCharts.com.

As of Feb. 7, MLN’s total returns have been at 2.81% for the past month, compared to 11.71% in the past three months and 3.76% year to date (YTD).

As with any investment, it’s important to consider one’s individual financial situation and goals carefully. Investors are always encouraged to do their due diligence before adding any stock or exchange-traded fund (ETF) to their portfolio.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.

Jim Woods

Jim Woods is a 20-plus-year veteran of the markets with varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor. Jim is the editor of Intelligence Report, Investing Edge, the Bullseye Stock Trader, and The Deep Woods (formerly the Weekly ETF Report). His books include co-authoring, “Billion Dollar Green: Profit from the Eco Revolution,” and “The Wealth Shield: How to Invest and Protect Your Money from Another Stock Market Crash, Financial Crisis or Global Economic Collapse.” He’s also ghostwritten many books and articles, as well as edited content for some of the investment industry’s biggest luminaries. His articles have appeared on many leading financial websites, including StockInvestor.com, InvestorPlace.com, Main Street Investor, MarketWatch, Street Authority, Human Events and many others. Jim formerly worked with Investor’s Business Daily founder William J. O’Neil, helping to author training courses in the CANSLIM stock-picking methodology. The independent firm TipRanks rates Jim the No. 3 financial blogger in the world (out of more than 6,000). TipRanks calculates that, since 2012, he's made 361 successful recommendations out of 499 total, earning a success rate of 72% and a +15.3% average return per recommendation. He is known in professional and personal circles as “The Renaissance Man,” because his expertise includes such varied fields as composing and performing music; Western horsemanship, combat marksmanship, martial arts, auto racing and bodybuilding. Jim holds a BA in philosophy from the University of California, Los Angeles, and is a former U.S. Army paratrooper. A self-described “radical for capitalism,” he celebrates the virtue of making money from his Southern California horse ranch.