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Looking For Shelter? WisdomTree's Latest ETFs Target Stability In Shaky Bond Market

BY Benzinga | MUNICIPAL | 04/03/25 04:53 PM EDT

WisdomTree, an international asset manager, has grown its portfolio with the introduction of two new municipal bond ETFs: the WisdomTree Core Laddered Municipal Fund and the WisdomTree High Income Laddered Municipal Fund . These funds are designed to offer investors tax-efficient income and diversification advantages.?

These funds are currently trading at expense ratios of 0.25% and 0.35%, respectively.

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In today’s changing fixed-income environment, investors are increasingly looking for stability and income. Municipal bonds provide high credit quality, lower default rates compared to corporate bonds, and strength in rising-rate environments, which makes them an attractive option.

WTMU has a laddered maturity strategy of investing in municipal debt securities and can invest up to 30% of its assets in municipal securities subject to the federal alternative minimum tax. The fund seeks an average duration of between four and eight years, targeting securities that should mature or become callable within 15 years.

The ETF seeks current income that is tax-exempt at the federal level.

WTMY has a similar laddered strategy but aims to maximize income and yield by delivering a high current income that is free from federal income taxes. It has a targeted mix of high-yield municipal securities and investment-grade municipals. The fund aims for an average duration of five to ten years, focusing on securities likely to mature or be callable within 15 years.

The rollouts follow the increasing popularity of municipal bond funds. BlackRock rolled out the iShares Long-Term National Muni Bond ETF (LMUB) in March with an expense ratio of 0.09% to provide investors with investment-grade U.S. municipal bonds with maturities of 12 years or more.?

Municipal bonds are becoming increasingly popular as a result of their potential tax benefits and relatively strong credit quality versus corporate bonds. They can also offer diversification benefits and potentially have defensive properties in a rising interest rate environment.

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In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

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