This is an actively managed bond ETF that holds mainly tax-exempt municipal bonds issued by US states and local governments, and also uses some taxable bonds to manage after-tax returns. Its effective duration is kept in the long range.

It suits investors in high tax brackets, as well as those who want steady income and accept the interest rate sensitivity of long-term bonds.

The ETF is actively managed by AllianceBernstein.

The fund places most of its assets in municipal bonds exempt from federal income tax and broadens the remainder into taxable bonds to raise after-tax returns. The management team selects securities by weighing credit quality, maturity, diversification and expected after-tax return, and also takes into account the taxable gains that trading generates.

• Manages after-tax returns by combining a core of tax-exempt municipal bonds with taxable bonds
• Maintains a long duration range, giving greater price responsiveness when rates fall
• Uses discretionary selection by the managers rather than index replication

Assets under management (AUM) stand at $58.0M, and the expense ratio is 0.28% per year.

The fee burden is somewhat higher than for broad municipal bond ETFs, but active selection and after-tax return management are what that cost buys. Trading volume is smaller than for the large municipal bond ETFs, so it is wise to check the bid-ask spread.

The long end of the municipal bond market follows the direction of interest rates directly. Price pressure was heavy when rates rose, while recovery momentum stands out when rate expectations fall. The recent trend has also moved in step with Treasury yields.

Demand from high-income investors seeking after-tax returns is the main driver of inflows into municipal bond ETFs. Money has been steadily shifting toward actively managed municipal products as well, and this fund is still a small asset within its category.

Its strength is active municipal bond management aimed at after-tax returns, while its weaknesses are the interest rate sensitivity that comes with long duration and its small asset size.

Among the products listed, VTEB and MUB (ETFs) are large, low-fee products that cover the whole municipal bond market through an index, while active municipal bond ETFs such as JMUB and CGMU use a similar management style and are direct comparisons on fees and fund size. Products such as CMF concentrate on a specific state and have a different tax structure. Investors who want shorter maturities can look at the same issuer's intermediate-term product TAFM or SUB, TFI offers broad exposure, and HYD is an option for those willing to take more credit risk for higher yield.

Here are the items to review before investing in this ETF. The first questions are whether the tax exemption actually translates into a gain in your own tax bracket, and whether you can tolerate the price swings of a long duration.

Because these are long-term municipal bonds, price losses accumulate when rates rise. Fiscal deterioration or credit downgrades at an issuer can also pull down the prices of individual holdings, and Korean-won investors also bear dollar exchange rate fluctuations.

It is worth considering for investors in high tax brackets who want to secure after-tax income. To lower costs, compare passive products such as VTEB and MUB, and for shorter maturities, compare options such as TAFM before deciding.