FTNY vs VTEB

FTNYBFranklin New York Municipal Income ETF

VTEBAVanguard Tax-Exempt Bond ETF

In short

FTNY A 1983-vintage New York muni portfolio in ETF clothing, converted from a Putnam fund in 2025. Actively run for income exempt from federal, New York State and New York City income taxes, 0.36% net of a waiver through March 31, 2027.

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

FTNY The fund seeks a high level of current income exempt from federal and New York State and City personal income taxes 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

• FTNY Triple exemption: it targets interest free of federal, New York State and New York City personal income tax, a layer broad national muni funds don't aim for.sec.gov
• Not a startup fund. The portfolio ran as Putnam New York Tax Exempt Income Fund from 1983 and reorganized into this ETF in October 2025 with the same goal and strategy.franklintempleton.com
• Active security picking, roughly 300 bonds across general obligation, revenue and tender option issues, mainly investment grade with maturities of three years or longer.sec.gov
• Income lands monthly rather than quarterly.

• 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

• FTNY Cost runs above the category median: 0.36% net of a waiver through March 31, 2027 (0.37% gross), versus 0.03% at VTEB and 0.05% at MUB, both broad national index funds.
• Single-state by design, so New York budget and local credit news move this portfolio more than it would a 50-state muni fund.sec.gov
• The prospectus allows up to 25% in below-investment-grade bonds (none rated below B, max 10% in B), and some interest can fall under the federal AMT.sec.gov

• 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 FTNY profile⁠

Full VTEB profile⁠