This is an actively managed ETF that invests mainly in municipal bonds issued by US state and local governments and public agencies, seeking interest income exempt from federal income tax. The portfolio managers select securities, focusing on investment-grade bonds.

It suits US taxable investors who prioritize after-tax income and want to take advantage of the federal income tax exemption.

It is an ETF run with an active management approach by Sterling Capital Funds.

The fund uses an enhanced core strategy that seeks federal income tax-exempt interest while also giving weight to capital preservation. It centers on investment-grade municipal bonds and allocates a portion to high-yield bonds to supplement yield, while security selection and duration adjustments are left to the managers' discretion.

• Seeks federal income tax-exempt interest
• Security selection and credit allocation by the active management team

Assets under management (AUM) stand at $242.1M, and the expense ratio is 0.35% per year.

Compared with the passive municipal bond ETFs MUB and VTEB, active management leaves room for security selection, but the fee burden is somewhat higher.

Municipal bond returns depend on the direction of market interest rates and on credit spreads. During periods of rate volatility, bond prices and distribution yields move together, and recent trading has also shown volatility tied to interest rate movements.

In a market environment where demand for after-tax income has taken shape, money tends to flow into municipal bond ETFs. Attention has also been observed shifting toward bond products when expectations of rate cuts build.

Its strengths are federal income tax-exempt income and the room for security selection that active management provides, while its weakness is a fee somewhat higher than passive peers.

Among comparable funds in the same municipal bond category shown in the table, MUB and VTEB are lower-cost, broad passive municipal bond ETFs, while JMUB and CGMU are actively managed municipal bond ETFs with a similar management approach. For investors seeking a higher distribution yield, HYD, which concentrates on high-yield municipal bonds, is also worth considering.

Here are the points to review before investing in SCNM. It is an income product that aims to benefit from the federal income tax exemption, but interest rate sensitivity, the management fee, and whether the tax treatment applies to you should all be confirmed before buying.

Rising interest rates and wider credit spreads are the main drivers of municipal bond price declines. Because of its allocation to some high-yield bonds, volatility can increase during periods of market stress.

This is an active municipal bond ETF suited to US taxable investors who prioritize after-tax income. If cost matters most, MUB and VTEB are the candidates to consider, and if you prefer active management, SCNM is the one to consider.