PZT vs VTEB

PZTCInvesco New York AMT-Free Municipal Bond ETF

VTEBAVanguard Tax-Exempt Bond ETF

In short

PZT One of the few ETFs built only for New York municipal bonds, and it fishes at the long end of the curve. Tracks a long-term New York muni index, aims for income exempt from federal tax and free of the AMT, and has been running since 2007.

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

PZT The Fund seeks current income exempt from federal income tax through a portfolio of New York municipal securities. It generally invests at least 80% of assets in municipal securities comprising its declared index.

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

• PZT A single-state mandate with a clear job: New York municipal securities chosen to pay income exempt from federal tax, with the alternative minimum tax screened out.invesco.com
• The benchmark is a long-term New York muni index, so this is a deliberate long-maturity stance rather than a blended one.invesco.com
• Roughly 1,200 bonds, so no single New York issuer carries the portfolio. Income is paid monthly.
• At 0.28%, the fee sits a shade below the median for muni bond ETFs.

• 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

• PZT That 0.28% is still well above the cheapest New York option, iShares' NYF at 0.09%, and far above broad national muni funds priced near 0.03%.
• Trading is thin next to national muni ETFs, which tends to mean wider spreads on the way in and out.
• Two concentrations stack here: one state's credit and the long end of the maturity curve, where prices move more when rates do.

• 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 PZT profile⁠

Full VTEB profile⁠