The fund tracks an index that holds long-term, US dollar-denominated, tax-exempt municipal bonds spanning the high-yield segment and the borderline between high yield and investment grade. It is a passive fund that invests most of its assets in the index's constituent securities.

It suits bond investors who want to reduce their tax burden and receive monthly distributions, and who can tolerate credit risk and long duration.

It is an ETF managed by VanEck using a passive (index-tracking) approach.

The fund holds a broad range of the high-yield and borderline-grade municipal bonds that make up the index, tracking the performance of the market as a whole. Rather than picking individual bonds, it dilutes default risk through broad diversification, and its weighting toward longer maturities means interest rate changes are strongly reflected in its price.

• A portfolio that boosts interest income by reaching into the lower-credit-quality segment of tax-exempt municipal bonds
• Broad diversification across thousands of holdings, softening the impact of any single issuer's default
• Monthly distributions, which shorten the cash flow cycle

Assets under management (AUM) stand at $4.6B, and the expense ratio is 0.32% per year.

Even within the same municipal bond category, this fund offers a higher distribution level than investment-grade-focused products, but at the cost of greater credit risk and price volatility. It is also wise to check trading volume and bid-ask spreads.

Its price has continued to swing widely depending on the direction of interest rates. It has weakened during periods of rising rates because of its long duration, and when expectations of easing grew, its rebound was relatively large. The distribution stream itself has remained steady on a monthly basis.

Individual investors seeking tax-exempt income have been putting money into municipal bond ETFs broadly, but when credit spreads widen, money tends to leave the high-yield segment first. The fund is also sensitive to tax policy debates and news about local government finances.

Its strengths are tax-exempt interest income and monthly distributions, while its weaknesses are the price volatility that comes from credit risk and long duration.

VTEB(ETF) and MUB(ETF), shown in the table, are broad, investment-grade-focused municipal bond products with lower expense ratios and larger asset bases. CMF(ETF) is limited to California holdings, while JMUB, CGMU, and others differ in asset size and expense levels. For a direct substitute within high-yield municipal bonds, options include HYMB; for shorter maturities, SHYD, SUB, and similar funds; and for the intermediate segment, ITM and others are also worth considering.

Here are the points to check before investing in this ETF. Approaching it solely for the tax-exempt benefit makes it easy to overlook credit risk and interest rate risk, so you should understand its character first.

Losses can deepen when local government fiscal deterioration, wider credit spreads, and rising interest rates coincide. In periods when trading in the underlying bonds is thin, transaction costs also increase.

If you want tax-exempt interest and a monthly distribution stream and can tolerate credit risk, the fund can serve as a satellite holding within the bond portion of a portfolio. If stability is the priority, it is advisable to hold an investment-grade-focused product as the core and split the allocation accordingly.