This is an actively managed ETF that invests in municipal bonds issued by US state and local governments, seeking interest income exempt from federal income tax. It holds most of its net assets in a diversified portfolio of investment-grade municipal bonds.

It suits long-term investors in high tax brackets who want federally tax-exempt interest income and bond diversification.

The ETF is actively managed by Avantis Investors.

It is an active strategy that keeps the diversification and low turnover of an index approach, while the management team adds value at its discretion using current yield information. It holds investment-grade municipal bonds broadly and focuses on reducing unnecessary trading costs and tax impact through efficient trading.

• Interest income exempt from federal income tax
• Cost-efficient management with low turnover

Assets under management (AUM) stand at $172.8M, and the Expense Ratio is 0.15% per year.

Active management is what sets it apart from the passive municipal bond ETFs MUB and VTEB, and its expense ratio is low relative to the category average.

Municipal bond returns move with market interest rates, and bond prices tend to fluctuate along with them when rates are changing. Because the fund is actively managed, the management team's judgments on duration and security selection are reflected in its performance.

Demand for tax-exempt interest income is steady, so fund flows into municipal bond ETFs have been relatively stable, though inflows and outflows are affected by the interest rate environment and changes in tax policy.

Its strengths are federally tax-exempt income, a low expense ratio, and active management, while its weaknesses are interest rate sensitivity and credit risk.

As shown in the table, MUB and VTEB are large passive ETFs in the same municipal bond category and offer lower-cost, broad core options, while JMUB is also an actively managed municipal bond ETF and a direct comparison. If you want higher income, you can also consider HYD, which invests in high-yield municipal bonds, or CGMU if you are looking for broad active management.

These are the points to review before investing in AVMU. Although it is a federally tax-exempt bond ETF, interest rate sensitivity, the credit structure of the issuing local governments, the scope of the tax benefits, and exchange rate exposure are items to confirm before buying.

Interest rate changes and the credit condition of the issuing local governments are the main drivers of short-term price movements. In a period of rising rates, even tax-exempt bonds can post unrealized losses.

For investors in high tax brackets, it is worth considering as the federally tax-exempt bond core of a portfolio. If you want a low-cost passive fund, MUB and VTEB are the better fit, and if you prefer active management, AVMU is the more suitable choice.