BlackRock's Latest ETF Conversion Taps Into Growing Muni Bond Interest

BlackRock has broadened its suite of municipal bond ETFs by transforming its BlackRock High Yield Municipal Fund into an ETF. The newly launched, actively managed iShares High Yield Muni Active ETF aims to deliver tax-exempt income at the federal level. The fund carries a net expense ratio of 0.42%, including a waiver on fees. By converting to an ETF structure, BlackRock seeks to improve efficiency, transparency and accessibility for investors.

The conversion comes at a time when municipal bond ETFs are seeing quite the demand.

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"The growth of active ETFs is driving innovation and unlocking new opportunities for investors globally," said Jorge del Valle Papic, Americas Head of Active Investments within Global Product Solutions at BlackRock. "This conversion underscores the strength of our product platform and our dedication to offering access to BlackRock's premier active management capabilities through an investment vehicle that aligns with our clients' evolving needs."

"The current high interest rate environment presents a rare opportunity to generate income, particularly in municipal bonds," stated Pat Haskell, head of the Municipal Bond Group at BlackRock. "HIMU leverages the ETF format to optimize exposure to favorable yield levels and strong credit quality, ultimately striving to generate excess returns for our clients."

HIMU focuses on municipal bonds with maturities of five years or more, providing investors exposure to long-term debt instruments.

High-yield and distressed municipal bonds are often associated with significant risk. However, BlackRock's active management provides flexibility and adaptability that passive funds may lack.

The fund's introduction is in line with a broader trend of increased investor interest in municipal bonds, prompting asset managers to develop new products tailored to this demand.

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