STAX vs VTES

STAXCNomura Tax-Free USA Short Term ETF

VTESAVanguard Short-Term Tax-Exempt Bond ETF

In short

STAX Actively managed munis at the short end of the curve: federally tax-free income paid monthly, with capital preservation written into the mandate. A small, young fund in a category ruled by giant index trackers.

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

STAX The fund seeks current interest income exempt from federal income tax while attempting to preserve capital through investments in short-term municipal obligations.

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

• STAX Active, not indexed: a manager picks the short-term municipal bonds, chasing income exempt from federal tax while attempting to preserve capital.
• Pays monthly, so the tax-exempt income shows up on a regular cadence rather than quarterly.
• 0.29% a year, roughly what the typical muni bond ETF charges, and that buys an active manager rather than an index rulebook.

• 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

• STAX Index beta is far cheaper: VTEB charges 0.03% and MUB 0.05%, versus 0.29% here. They track broad muni benchmarks across the maturity curve instead of trading actively.
• A small fund that trades thinly, which can widen the gap between bid and ask at the moment you place an order.
• Launched in December 2023, so there is limited history behind the manager's approach compared with long-running muni funds.

• 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 STAX profile⁠

Full VTES profile⁠