BAB vs VCRM

BABBInvesco Taxable Municipal Bond ETF

VCRMAVanguard Core Tax-Exempt Bond E

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.

VCRM Vanguard's active answer in a mostly-index category: managers working the whole muni curve for 0.12% a year, under half the muni ETF median fee. Monthly income, exempt from federal personal income taxes.

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.

VCRM The fund seeks total return through current income exempt from federal personal income taxes and capital appreciation.

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.

• VCRM Active management priced at 0.12% a year, less than half the 0.30% median for muni ETFs.
• Run by Vanguard's Fixed Income Group, with all-curve exposure to primarily high-quality investment-grade munis spread across sectors, states and credit tiers.prnewswire.com
• Pays monthly, with income the fund seeks to keep exempt from federal personal income taxes.vanguard.com
• Sticks tightly to its stated mandate and grades among the strongest implementations in its muni peer group.

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

• VCRM You pay up for the manager: index peers VTEB and SCMB run at 0.03%, a quarter of VCRM's 0.12%.
• Launched in November 2024, so there is only a short record to judge the active mandate on.
• All-curve exposure puts longer maturities in the mix, so prices move with rates. And the exemption is federal: state treatment of a national muni fund depends on where you live.prnewswire.com

Full BAB profile⁠

Full VCRM profile⁠