EVSM vs VTES

EVSMBEaton Vance Short Duration Municipal Income ETF

VTESAVanguard Short-Term Tax-Exempt Bond ETF

In short

EVSM Tax-free monthly income with the interest-rate dial turned down. EVSM's own mandate keeps average duration under three years, and it charges well under the typical muni bond ETF, an unusual combination in a fee-sensitive category.

VTES Vanguard's muni ETF on a short leash: an AMT-free tax-exempt index, but capped at seven years to trim interest-rate sensitivity. Five basis points, roughly 2,700 bonds, income paid monthly.

Stated mandate

EVSM The Fund seeks current income exempt from regular federal income tax. It invests as a short-duration municipal strategy, normally maintaining a dollar-weighted average portfolio duration below three years.

VTES The Fund seeks to track an index representing investment-grade U.S. municipal bonds with remaining maturities from one month through seven years.

Why people hold it

• EVSM 0.19% a year, versus a roughly 0.30% median for muni bond ETFs. When most of the return is coupon, the fee gap is real money.
• The short leash is contractual, not a style drift: the fund normally keeps dollar-weighted average duration below three years, measured against a 1-3 year municipal index.
• Income is the stated job, and it arrives monthly. The objective is current income exempt from regular federal income tax.
• Trading since 2018 under the Eaton Vance banner, with a solid asset base and a standing in the upper half of a crowded muni bond ETF field.

• VTES Costs 0.05% a year, a fraction of what the typical muni-bond fund in its category charges. One of the cheapest ways into tax-exempt bonds.
• Maturities run one month to seven years, so the portfolio moves less on rate swings than long-dated muni funds. Short duration is the whole point here.vanguard.com
• The index is AMT-free national investment-grade munis, so interest is federally tax-exempt and not caught by the alternative minimum tax.vanguard.com
• Roughly 2,700 bonds via index sampling, run by Vanguard's fixed income group, with distributions paid monthly. It tracks its benchmark closely.vanguard.com

Worth knowing

• EVSM Short is the whole point, which means skipping the longer end of the muni curve where more yield typically sits.
• Broad muni index funds undercut it on price: VTEB and MUB run at 0.03% and 0.05%. They also span the full maturity curve rather than the short end.
• Volume is moderate rather than heavy, which is typical for a short-duration muni fund of this size.

• VTES Short maturities cut both ways. Vanguard's own materials describe moderate current income, the trade-off for less rate sensitivity than longer muni portfolios.vanguard.com
• It's a national fund, so it isn't structured to shelter state income tax the way single-state muni ETFs such as NYF are.
• Launched in 2023, it has a shorter live record than muni ETFs that have been trading for over a decade, including its broader sibling VTEB.

Full EVSM profile⁠

Full VTES profile⁠