HMOP vs VTEB

HMOPBHartford Municipal Opportunities ETF

VTEBAVanguard Tax-Exempt Bond ETF

In short

HMOP Most muni ETFs buy the index and call it a day. HMOP hands the keys to Wellington: an active muni portfolio that can hold up to 35% high yield paper, roam any maturity, and pay federally tax-exempt 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

HMOP The fund seeks current income generally exempt from federal income tax together with long-term total return.

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

• HMOP Actively run by sub-adviser Wellington, with room for up to 35% in below-investment-grade munis and bonds of any maturity, corners index trackers cannot reach.sec.gov
• Monthly income that is generally exempt from federal tax, spread across roughly 500 holdings and diversified over states and sectors.sec.gov
• At 0.29%, it charges about what the typical muni ETF does, unusual for a fund with a live manager picking the bonds.
• Trading since 2017 and sitting in the upper half of a crowded muni ETF field.

• 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

• HMOP Index heavyweights VTEB (0.03%) and MUB (0.05%) cost a fraction of this. The premium buys active judgment, not index tracking.
• High yield munis and any-maturity latitude mean credit and rate exposure shift with the manager's view, not a fixed benchmark.sec.gov
• Some of the income can be subject to the Alternative Minimum Tax.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 HMOP profile⁠

Full VTEB profile⁠