FLMB vs VTEB

FLMBBFranklin Municipal Green Bond ETF

VTEBAVanguard Tax-Exempt Bond ETF

In short

FLMB Most muni funds buy the whole tax-exempt market. FLMB narrows the lens: a prospectus commitment of at least 80% of net assets to municipal green bonds, held in a compact portfolio that pays income monthly.

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

FLMB The fund commits at least 80% of its net assets to municipal green bonds.

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

• FLMB The green mandate is contractual, not marketing: the prospectus commits at least 80% of net assets to municipal green bonds.
• Compact by design, roughly 80 bonds, so the green-project theme shows up in the portfolio instead of being diluted across thousands of holdings.
• The screen doesn't cost extra versus the typical muni fund: 0.30%, right at the category median.
• Municipal bond income, paid monthly, from a Franklin Templeton fund that has been trading since 2017.

• 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

• FLMB Thinly traded. The bid-ask spread can matter more to your all-in cost than the expense ratio does.
• The broad muni index giants run far cheaper: VTEB and SCMB at 0.03%, MUB at 0.05%. The green screen carries a real price premium.
• A slice of a slice. With about 80 bonds, individual issuers and project types swing results more than in a thousand-bond index fund.

• 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 FLMB profile⁠

Full VTEB profile⁠