CGMU vs VTEB

CGMUACapital Group Municipal Income ETF

VTEBAVanguard Tax-Exempt Bond ETF

In short

CGMU Capital Group's answer to the muni index giants: an actively run book of roughly 1,500 bonds, benchmarked to a blend that is deliberately 15% high yield. Federally tax-exempt income, paid monthly, for 0.27% a year.

VTEB Vanguard's national muni index fund, running since 2015 at three basis points, a tenth of what the typical muni ETF charges. Its benchmark screens for investment-grade bonds whose income is exempt from federal tax and the AMT.

Stated mandate

CGMU The fund seeks high current income exempt from regular federal income tax while preserving capital.

VTEB VTEB seeks to track an index measuring the investment-grade segment of the U.S. municipal bond market. It uses passive sampling to approximate the index and generally invests in federally tax-exempt municipal securities.

Why people hold it

• CGMU Active management, not index-tracking. Capital Group's bond desk picks the paper across roughly 1,500 positions rather than buying whatever the muni index prints.capitalgroup.com
• 0.27% a year, below the median muni bond ETF. Cheap for an active mandate, and cost matters double when the whole point is after-tax income.
• The benchmark blend, 85% high grade and 15% high yield in 1 to 17 year maturities, builds in an income tilt and stops short of the 30-year end of the curve.
• A multi-billion-dollar fund that trades actively and distributes monthly. Rare scale for an active muni ETF, and it shows up as easier entry and exit.

• VTEB Three basis points a year against a 0.30% muni-ETF median. On tax-exempt bonds, where coupons are modest, that fee gap is a real slice of the payout.
• The index holds only investment-grade munis whose interest is exempt from federal income tax and the alternative minimum tax, so the income carries no AMT surprise.vanguard.com
• A multi-billion-dollar fund and one of the most heavily traded in the muni category, which tends to show up as tight bid-ask spreads. Income is paid monthly.
• It has tracked its benchmark closely and sits among the strongest implementations in a crowded muni bond peer group.

Worth knowing

• CGMU Index rivals VTEB and SCMB charge three basis points. You are paying a real premium here for active security selection.
• That 15% high-yield slice in the benchmark means credit risk a pure high-grade muni fund would not carry.
• The mandate targets income exempt from regular federal income tax. State and local treatment depends on where you live and what the fund holds.capitalgroup.com

• VTEB Federal exemption, not blanket coverage. Income can still be taxable in your home state, which is why single-state funds like NYF exist alongside it.vanguard.com
• Credit quality is investment grade, so rates are the main swing factor: when muni yields rise, bond prices and the fund's share price fall.vanguard.com
• Sampling, not full replication. The fund owns a representative slice of a very large index rather than every bond in it.vanguard.com

Full CGMU profile⁠

Full VTEB profile⁠