BAB vs SCMB

BABBInvesco Taxable Municipal Bond ETF

SCMBASchwab Municipal 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.

SCMB Schwab's take on the core muni sleeve: three basis points, thousands of AMT-free bonds from across the country, and a monthly distribution. Bottom-of-the-table pricing, no frills attached.

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.

SCMB The fund seeks to track, before fees and expenses, the total return of an index representing the U.S. AMT-free municipal bond market.

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.

• SCMB Three basis points a year, against a 0.30% median for muni bond funds. Among the top-graded names in the category, only Vanguard's VTEB matches that fee.
• Follows the ICE AMT-Free Core U.S. National Municipal Index across thousands of bonds and issuers, so no single borrower or state drives the portfolio.
• Plain passive plumbing done well: it stays close to its index, trades actively, and pays monthly. One of the stronger implementations in the muni aisle.

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

• SCMB Launched in 2022, so its live record is shorter than muni staples like MUB and VTEB, even though the strategy is the same broad-market idea.
• Bond math still applies. This is a portfolio of municipal bonds, so share prices move opposite to interest rates.
• National in scope, not single-state like NYF, so it is not built around any one state's tax rules.

Full BAB profile⁠

Full SCMB profile⁠