BAB vs MUB

BABBInvesco Taxable Municipal Bond ETF

MUBAiShares National Muni Bond ETF

In short

BAB Munis without the tax break. BAB has owned taxable municipal debt since 2009, the Build America Bonds corner of the market, and pays monthly income the IRS treats like any other taxable coupon.

MUB Municipal bonds, indexed and cheap. Since 2007, MUB has packaged investment-grade national munis into tax-exempt monthly income for five basis points a year, and it sits among the deepest pools in the muni-ETF aisle.

Stated mandate

BAB The Fund normally invests at least 80% of its total assets in securities comprising the ICE BofAML US Taxable Municipal Securities Plus Index. It uses representative sampling rather than purchasing every index security.

MUB The fund seeks to track an index of investment-grade U.S. municipal bonds, providing diversified exposure to the national municipal-bond market and tax-exempt income.

Why people hold it

• BAB Launched in 2009, the same year Congress created Build America Bonds, and still a billion-dollar fund in a crowded muni aisle.wikipedia.org
• Costs 0.28% a year, under the 0.30% median for its muni bond peer group.
• Spreads across roughly 1,900 bonds, sampling the ICE BofA US Taxable Municipal Securities Plus Index rather than buying every piece of it.invesco.com
• Pays monthly, and changes hands often enough to handle ordinary-size orders.

• MUB 0.05% a year against a muni-ETF median near 0.30%. In a category built on modest, tax-exempt yields, that fee gap is real money left in the fund.
• The benchmark is AMT-free: the ICE AMT-Free US National Municipal Index screens out munis whose interest can be pulled into the alternative minimum tax.ishares.com
• Tracks its index closely, one of the tighter jobs in its peer group, and distributes monthly. A multi-billion-dollar fund that trades actively.
• Broad investment-grade exposure across the national muni market, spread over thousands of issuers rather than one state's budget.ishares.com

Worth knowing

• BAB Taxable is in the name: interest here is federally taxable, unlike the tax-free coupons most muni funds hand out.sifma.org
• Cheap against muni peers, not against the giants: broad tax-exempt funds like VTEB and SCMB charge 0.03%.
• No new Build America Bonds since the program lapsed at the end of 2010, so the index casts wider, across taxable municipal securities generally.sifma.org

• MUB Two rivals undercut it: VTEB and SCMB both run 0.03%. A two-basis-point gap is small, but it is a gap.
• A bond fund with no maturity date to hold to. Share prices move with interest rates and muni credit conditions, both directions.
• National by design, so no single-state tilt and no in-state tax angle. iShares runs state-specific muni funds such as NYF for that job.

Full BAB profile⁠

Full MUB profile⁠