FMHI ETF: What Is It? A Complete Guide to Returns, Expense Ratio, Holdings, and Alternative ETFs
An actively managed municipal bond ETF that seeks federally tax-exempt income. It concentrates on high-yield municipal sectors, aiming for higher interest income than typical high-quality municipal bonds.
SubscribeWhat Is This ETF?
The fund invests mainly in high-yield municipal bonds with intermediate to long maturities, and a significant portion of its assets is held in below-investment-grade or unrated bonds. Through active management by a professional team, it selects issues with high credit premiums to secure income.
It suits investors in a high tax bracket who are willing to take on additional risk in exchange for higher tax-exempt income than standard municipal bonds provide.
It is an ETF launched by First Trust in 2017 and run with a passive (index-tracking) management approach.
How Does It Invest?
| Item | Details |
|---|---|
| Management style | Active (municipal bond selection) |
| Target assets | US federally tax-exempt municipal bonds |
| Credit quality | Focused on high-yield and unrated bonds |
| Rebalancing frequency | As needed (active management) |
| Total expense ratio | 0.49% |
The fund invests mainly in revenue bonds with clearly defined sources of income, such as airports, toll roads, and healthcare facilities. By analyzing the financial health of individual projects, it manages default risk while focusing on capturing high income from market inefficiencies.
- Ability to select high-yield municipal bonds through active management
- Risk management through broad diversification across issuers
Size and Costs
Assets under management (AUM) stand at $1.1B, and the total expense ratio is 0.49% per year.
Compared with standard high-quality municipal bond ETFs such as MUB or VTEB, the fund takes on higher credit risk in exchange for a relatively high level of income on an after-tax yield basis.
Performance and Trends
1-Year Price Performance
Dividend & Yield
52-Week Price RangePrices fluctuate with shifts in municipal market supply and demand during periods of changing interest rates, but steady demand for tax-exempt distributions tends to support the downside. During economic recoveries, credit spread tightening can also create additional return opportunities.
Inflows from high-net-worth investors facing heavy tax burdens remain steady, and demand for high-yield munis tends to rise in particular during periods of stable rates, as investors seek high absolute yields.
Strengths and Weaknesses
The fund offers tax-exempt benefits and high interest income at the same time, but investors should be mindful of its higher credit risk and interest rate sensitivity compared with standard municipal bonds.
💪 Key Strengths
⚠️ Points to Watch
Alternative ETFs and Related Products
MUB, VTEB, JMUB, and the others shown in the table are mainly low-cost passive products that invest in high-quality, investment-grade municipal bonds. By contrast, FMHI pursues an active strategy focused on high-yield sectors, and a competing product is HYMB, which tracks a high-yield municipal bond index. Investors who want more specialized management can also compare active muni ETFs such as CGMU.
Peer Comparison ETFs| Ticker | Name | Price | Change | AUM | Total Expense Ratio | Dividend Yield | 1Y |
|---|---|---|---|---|---|---|---|
 MUB | iShares National Muni Bond ETF | $104.91 | +0.1% | $54.9B | 0.05% | 3.26% | -2.2% |
 VTEB | Vanguard Tax-Exempt Bond ETF | $49.24 | +0.2% | $53.5B | 0.03% | 3.46% | -2.3% |
 JMUB | JPMorgan Municipal ETF | $49.40 | +0.1% | $9.2B | 0.18% | 3.79% | -2.5% |
 CGMU | Capital Group Municipal Income ETF | $26.97 | +0.2% | $7.6B | 0.27% | 3.39% | -1.5% |
 CMF | iShares California Muni Bond ETF | $56.28 | +0.3% | $5.4B | 0.08% | 3.02% | -2.0% |
Top Holdings| Ticker | Name | Weight | Price | Change | Market Cap | P/E | Dividend Yield |
|---|---|---|---|---|---|---|---|
 NYT | New York Times Co | 0.01% | $68.36 | +4.3% | $11.0B | 27.4 | 1.31% |
 MAIN | Main Street Capital Corp | 0.01% | $57.01 | +0.3% | $5.3B | 14.3 | 7.29% |
 AAL | American Airlines Group Inc | 0.00% | $13.18 | +1.9% | $8.7B | - | - |
 CMC | Commercial Metals Co | 0.00% | $62.28 | +0.1% | $6.8B | 10.6 | 1.29% |
| BAC | Bank Of America Corp | 0.00% | $49.42 | -0.7% | $341.0B | 11.8 | 2.43% |
Investor Checkpoints
These are the key indicators to review when considering an investment in FMHI. Alongside the tax-exempt benefits, investors need to understand the credit risk and carefully examine whether the fund fits their investment objectives.
| Checkpoint | What to Check | Current Status |
|---|---|---|
| 📉 Pre-tax vs. after-tax yield comparison | Check the effective yield based on your own tax bracket | Must check |
| 💵 Management fee level | Assess whether the fee is appropriate for an active strategy | Moderate |
| 📊 Credit rating distribution | Monitor trends in the weighting of high-yield and unrated bonds | Substantial |
| 🏛️ Policy and tax changes | Changes in federal tax rates and municipal bond policy developments | Significant impact |
High-yield municipal bonds may have lower market liquidity than standard bonds, and investors should keep in mind that if credit spreads widen during a recession, price declines could be larger than expected.
In conclusion, FMHI can be a useful alternative for investors in high tax brackets who want to strengthen the income portion of their portfolio to secure stable tax-exempt cash flow.
SubscribeDisclaimer: This content is for informational purposes only and does not constitute investment advice. All investment responsibility lies with the investor.
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