SCMB vs TAXF

SCMBASchwab Municipal Bond ETF

TAXFAAmerican Century Diversified Municipal Bond ETF

In short

SCMB Schwab's take on the core muni sleeve: three basis points, thousands of AMT-free bonds from across the country, and a monthly distribution. Bottom-of-the-table pricing, no frills attached.

TAXF Most muni ETFs just track an index of investment-grade paper. TAXF is actively run and can swing 5% to 35% of the book into high-yield and unrated munis, inside a 3 to 8 year duration band, for 0.25% a year.

Stated mandate

SCMB The fund seeks to track, before fees and expenses, the total return of an index representing the U.S. AMT-free municipal bond market.

TAXF Seeks current income exempt from federal income tax through an actively managed portfolio of municipal bonds spanning investment-grade and high-yield quality levels.

Why people hold it

• SCMB Three basis points a year, against a 0.30% median for muni bond funds. Among the top-graded names in the category, only Vanguard's VTEB matches that fee.
• Follows the ICE AMT-Free Core U.S. National Municipal Index across thousands of bonds and issuers, so no single borrower or state drives the portfolio.
• Plain passive plumbing done well: it stays close to its index, trades actively, and pays monthly. One of the stronger implementations in the muni aisle.

• TAXF Active in a category built on index trackers: managers set the investment-grade versus high-yield mix, with 5% to 35% earmarked for below-investment-grade and unrated munis.americancentury.comamericancentury.com 2
• Guardrails travel with the flexibility: a stated 3 to 8 year duration range to temper rate swings, spread across roughly 800 bonds.americancentury.com
• Pays monthly, and the income it targets is exempt from federal income tax.
• Trading since 2018, and it sits in the upper tier of a 60-plus fund muni bond group on our review.

Worth knowing

• SCMB Launched in 2022, so its live record is shorter than muni staples like MUB and VTEB, even though the strategy is the same broad-market idea.
• Bond math still applies. This is a portfolio of municipal bonds, so share prices move opposite to interest rates.
• National in scope, not single-state like NYF, so it is not built around any one state's tax rules.

• TAXF At 0.25% the fee is near the category median, but the big index trackers undercut it badly: VTEB and SCMB at 0.03%, MUB at 0.05%. You are paying for the credit calls.
• The extra income comes from high-yield and unrated munis, which is also where default and liquidity risk sit. Up to 35% of the portfolio can live there.americancentury.com
• Not one of the category's giants by assets or daily volume, so spreads and order size are worth a look before you trade.

Full SCMB profile⁠

Full TAXF profile⁠