This is an active ETF that does not track a specific index. Instead, the management team picks municipal bonds directly. The core concept is to allocate a significant portion of assets to municipal bonds rated at the low end of investment grade or below, in order to boost tax-exempt interest income.

It is suitable for investors with a heavy federal income tax burden who are willing to accept credit risk in exchange for higher tax-exempt interest income.

The ETF is managed with an active management approach by New York Life Investments.

The fund mainly invests in municipal bonds issued by state governments, local governments, and related public agencies, and allocates a substantial portion of them to lower-rated, high-yield bonds. It also holds floating-rate bonds and cash equivalents to manage liquidity and interest rate sensitivity.

• Active credit analysis by a team specializing in municipal bonds
• A structure that targets interest exempt from federal income tax
• An aggressive allocation with a high weighting in high-yield municipal bonds

Assets under management (AUM) stand at $33.1M, and the total expense ratio is 0.34% per year.

As a newly launched, small fund, it may have low trading volume and wide bid-ask spreads. Because it is actively managed, its fees tend to be higher than those of passive municipal bond ETFs.

The fund was listed only recently, so a meaningful return history has yet to build up. Prices of high-yield municipal bonds move with the direction of interest rates and changes in credit spreads, so for the time being both variables should be watched together.

Because the fund's asset base is still small, operating conditions can change significantly depending on fund inflows and outflows. Demand from high-income investors who prioritize after-tax returns, along with the fiscal condition of local governments, affects fund flows.

Tax-exempt high-yield interest and a specialized management team are its strengths, while the weighting in lower-rated bonds and the short track record are its weaknesses.

Data on peer ETFs that can be shown side by side in a comparison table is limited. Representative products in the same high-yield municipal bond asset class include HYD and HYMB, which allow a comparison of fees and credit composition. If you want to lower credit risk, a core product such as MUB, which diversifies across investment-grade municipal bonds broadly, is an alternative.

Here are the points to review before investing in this fund. Behind the advantage of tax-exempt high yield lie credit risk and the uncertainty typical of a new fund, so you should check the expense ratio, credit composition, liquidity, and distribution schedule in turn.

If an economic slowdown weakens local government finances, prices of low-rated municipal bonds are the first to wobble. Bond prices also fall when interest rates rise, and Korean won investors additionally bear exchange rate fluctuations.

For US taxpayers who want tax-exempt high-yield interest, this is a product worth considering. However, because its track record is short, we suggest deciding on your position size after confirming that its distribution record and asset base have built up.