TFI vs VTEB

TFIAState Street SPDR Nuveen ICE Municipal Bond ETF

VTEBAVanguard Tax-Exempt Bond ETF

In short

TFI Launched in 2007, this is one of the elder statesmen of municipal bond ETFs: roughly 1,900 AMT-free bonds, income paid monthly, and a fee that sits under the category median.

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

TFI The fund seeks to track, before fees and expenses, the price and yield performance of the ICE 1+ Year AMT-Free Broad Municipal 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

• TFI 0.23% expense ratio, below the 0.30% median for muni bond ETFs.
• About 1,900 bonds spread across the US muni market, so no single issuer or project carries much weight.
• Tracks the ICE 1+ Year AMT-Free Broad Municipal Index closely, and ranks among the stronger implementations in a crowded muni field.ssga.com
• Pays monthly, and the index screens out bonds subject to the alternative minimum tax.

• 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

• TFI Three-basis-point rivals like VTEB and SCMB cover broad munis for a fraction of the fee. Here you pay more for a track record dating to 2007.
• The index runs from one-year paper out to the long end, so share prices move with interest rates.
• Volume is moderate rather than heavy, so spreads can run wider than at the largest muni funds.

• 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 TFI profile⁠

Full VTEB profile⁠