MEAR vs VTES

MEARBiShares Short Maturity Municipal Bond Active ETF

VTESAVanguard Short-Term Tax-Exempt Bond ETF

In short

MEAR Active muni investing at the short end. Since 2015, iShares has hand-picked roughly 300 short-term municipal bonds here, chasing income exempt from federal tax and the AMT in a corner of the market most rivals index.

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

MEAR The Fund seeks to maximize tax-free current income through active management of short-term municipal securities. It generally invests at least 80% of assets in municipal securities whose interest is exempt from U.S. federal income tax and the federal AMT.

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

• MEAR Costs 0.26% a year, below the typical muni ETF, and that buys a manager picking bonds rather than a rulebook.
• At least 80% of assets sit in bonds whose interest is exempt from federal income tax and the federal AMT, spread across about 300 positions.ishares.com
• Short maturities mean milder price swings when rates move than long-dated muni portfolios face.
• A multi-billion-dollar fund that changes hands steadily, which tends to keep bid-ask costs contained.

• 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

• MEAR Index muni funds go far cheaper: VTEB at 0.03% and MUB at 0.05%. Active security selection is the thing you are paying the difference for.
• No index to check the work against. Outcomes ride on the manager's credit and maturity calls.
• Payouts land on an irregular schedule, and the tax break is federal. State and local taxes can still apply.

• 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 MEAR profile⁠

Full VTES profile⁠