SPDR® Nuveen Blmbg Hi Yld Muncpl Bd ETF’s Process Pillar rating is Average, but a strong management team still helps this strategy retain its Morningstar Medalist Rating of Bronze. The portfolio maintains a sizable cost advantage over competitors, priced within the least expensive fee quintile among peers.  

 The strategy’s management team earns an Above Average People Pillar rating. The strategy earns an Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a substantial underweight position in AA rated bonds and has an overweight in debt with 10- to 15-year maturities compared with category peers. The strategy's parent organization earns the firm an Above Average Parent Pillar rating. People Pillar and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Analyst Rating

SPDR® Nuveen Blmbg High Yld Muni Bd ETF earns an Average Process Pillar rating. Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category index on a risk-adjusted basis over the long term. The most significant contributor to the rating is the parent firm's five-year risk-adjusted success ratio of 67%. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median Morningstar Risk-Adjusted Return for the period. This fund tracks an index, which also increases its process rating. Historical data, like Morningstar's Active/Passive Barometer, shows that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. Lastly, the process is limited by the fund's unremarkable long-term risk-adjusted performance. This can be seen in its five-year alpha calculated relative to the category index, which suggests that the process has struggled over that period.

The investment strategy as stated in the fund's prospectus is: 

The investment seeks to provide investment results that correspond generally to the price and yield performance of the Bloomberg Municipal Yield Index.  The fund invests substantially all, but at least 80%, of its total assets in the securities comprising the index and in securities that the Sub-Adviser determines have economic characteristics that are substantially identical to the economic characteristics of the securities that comprise the index. The index measures the performance of U.S. dollar-denominated high-yield municipal bonds issued by U.S. states, the District of Columbia, and U.S. territories and local governments or agencies.  

 This strategy's 12-month yield is 4.0%, which mirrors its average peer. It also has a 4.8% 30-day SEC yield (a measure similar to yield-to-maturity). The portfolio's average surveyed credit quality is on par with peers, with both the fund and the average being rated BB. In terms of long-term interest-rate risk, this strategy is on par with peers. The longer a strategy's duration, the more sensitive it is to shifts in interest rates. This fund, with a 7.4-year duration, is expected to gain 7.4% of its net asset value if interest rates drop by 1 percentage point, and vice versa.

Average

Process

SPDR® Nuveen Blmbg High Yld Muni Bd ETF benefits considerably from its team, earning it an Above Average People Pillar rating. There are two managers listed on the fund: Timothy Ryan, Joel Levy. Experience on the team is abundant, with 15 years of average portfolio management experience. Together, they manage a total of five strategies, with a Bronze asset-weighted average Morningstar Medalist Rating, demonstrating their potential to deliver positive alpha relative to the category median in aggregate.  

 Note: This People Pillar rating is indirectly assigned by an analyst. Morningstar analysts evaluate the People Pillar for passive products at the brand level and may also differentiate by asset class. There is at least one other passive strategy at the firm that is covered by a Morningstar analyst, so the People Pillar rating of the fund is inherited from the rating that the Morningstar analyst assigned to investment vehicles under the same brand name.

Above Average

People

State Street Global Advisors is under new leadership but continues to move along the positive trajectory established by former leaders. SSGA maintains its Above Average Parent Pillar rating.
Cyrus Taraporevala, who oversaw much of SSGA’s recent transformation, retired from the CEO position in December 2022 and passed the baton to his successor, Yie-Hsin Hung. She inherited a business that’s become more disciplined with its fund lineup. Fees have come down, while product development remains focused on fixed-income and sustainability funds, and many of SSGA’s launches have echoed that intention.
The seeds that SSGA planted over the past several years have been bearing fruit. It built out a low-cost series of portfolio building-block ETFs in the U.S. bearing the “SPDR Portfolio” branding. SSGA launched these later than its industry rivals, so they aren’t as large. But they’re competitive, with solid management and low fees, which helped them consistently take in new money over the past several years.
SSGA continued to overhaul its ETF business in Europe with most of its recent fixed-income and sustainability fund launches. Many of these funds track indexes and charge relatively low fees. With operations in the U.S. and Europe standing on a firm foundation, SSGA will put more focus on its Asia-Pacific business—the smallest regional segment of its business.

Parent

SPDR Nuveen S&P High Yield Municipal Bond ETF

HYMB tracks a market-value-weighted index of high-yield and investment grade fixed-rate municipal US bonds with at least a year to maturity.

The SPDR Nuveen Bloomberg High Yield Municipal Bond ETF offers a high tax-equivalent yield of 7.9% but takes on significant risk by investing in junk and non-rated municipal bonds. Economic turmoil and a potential recession could lead to increased defaults in the high-risk municipal bond market, making the slightly higher yield not worth the risk. I rate HYMB a Sell.

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A reader asked for my thoughts on HYMB. HYMB is a simple high yield municipal bond index ETF.

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Materials and high-yield muni bonds ETFs traded with an outsized volume on Tuesday.

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Blackrock High Yield Muni Income Bond ETF

Speculative-grade municipal bond-related exchange traded funds have taken a beating, with high-yield munis on pace for their worst year since 2008. Year-to-date, the VanEck Vectors High Yield Muni ETF (HYD) declined 10.8%, the SPDR Nuveen S&P High Yield Municipal Bond ETF (NYSEArca: HYMB) decreased 11.0% and the BlackRock High Yield Muni Income Bond ETF (HYMU) [.

High-Yield Muni Bond ETFs Are Having a Rough Time

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iShares iBoxx High Yield Corporate Bond ETF

iShares Core S&P 500 ETF

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Invesco QQQ

SPDR Portfolio Intermediate Term Corporate Bond ETF

SPDR S&P 500 ETF Trust

iShares Short-Term National Muni Bond ETF

iShares 20+ Year Treasury Bond ETF

Investors were overall net purchasers of fund assets (including those of conventional funds and ETFs) for the eighth week in a row. Market volatility was on a roll during the fund-flows week.

U.S. Weekly FundFlows Insight Report: Investors Pile Into Treasury, Flexible, And High-Yield Funds And ETFs For The Flows Week

Ares Dynamic Credit Allocation Fund

Invesco BulletShares 2023 High Yield Corporate Bond ETF

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Hartford Municipal Opportunities ETF

First Trust Tactical High Yield ETF

JPMorgan High Yield Research Enhanced ETF

Invesco KBW Premium Yield Equity REIT ETF

PIMCO Enhanced Short Maturity Active ETF

Virtus Newfleet Multi-Sector Bond ETF

Virtus InfraCap U.S. Preferred Stock ETF

WisdomTree CBOE S&P 500 PutWrite Strategy Fund

Global X NASDAQ 100 Covered Call ETF

Virtus Seix Senior Loan ETF

Global X SuperDividend REIT ETF

 SPDR Blackstone Senior Loan ETF

Vanguard Short-Term Corporate Bond ETF

Vanguard Mortgage-Backed Securities ETF

Vanguard Real Estate ETF

Global X S&P 500 Covered Call ETF

In counter-cyclical investing, we want to buy CEFs when discounts are wide and sell them when discounts are tight. The problem we run into is that when we swap, we give up the upside of the NAVs should the bull market continue. We also give up higher income streams.

Swap Options For Reducing Discount Risk And Not Sacrificing A Ton Of Yield

MFS High Yield Municipal Trust

MFS High Income Municipal Trust

BlackRock MuniAssets Fund

Nuveen Quality Municipal Income Fund

Nuveen Municipal High Income Opportunity Fund

Nuveen Municipal Credit Income Fund

Invesco Municipal Income Opportunities Trust

"High-yield" tends to be associated with corporate credit in investor income portfolios. However, the high-yield/unrated municipal sector is also worth a look. We discuss some benefits of HY muni bond CEFs over their corporate analogues such as relative valuation, higher-quality fund portfolios, resilient leverage structures and more.

HY Munis Worth A Look Vs. HY Corporate Credit Right Now

Franklin Municipal Green Bond ETF

VanEck Vectors Long Muni ETF

Xtrackers Municipal Infrastructure Revenue Bond ETF

In the U.S. bond markets, municipal debt is seen as some of the most stable given that they’re backed by local governments albeit at lower-than-junk yields as most would expect.

The Coronavirus is Bringing Some Unforeseen Volatility to Munis

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The appetite for bonds has definitely reached a fervent pace amid the volatility thanks to the coronavirus outbreak.

Even with Low Yields, Investors Are Still Hungry for Municipal Bonds

With equities enduring a pounding due to the COVID-19 outbreak, it’s not surprising that safe-haven plays are thriving. One group that’s really thriving are municipal bonds and the related ETFs.

Shelter From The Storm And Yield With This Bond ETF

Treasury yields have been ticking higher with the major indexes in the equities market notching record highs.

Municipal Bond Activity Rises in November

Aside from the 30-year note, benchmark Treasury debt been giving investors less than a 2% yield as a result of a deluge of investors piling into safe haven assets as of late. However, one area of the bond market where they can look is high yield municipal bonds.

Yield-Starved Investors Can Look to Opportunities in Municipal Bonds

Muni bond ETFs may see a check in its rally as more supplies are ready to be added in order to tap low interest rates and high demand.

News for SPDR Nuveen S&P High Yield Municipal Bond ETF ETF (HYMB)