High Earners Are Skipping Treasuries for These 3 Tax Free Muni ETFs Yielding Over 4 Percent After Tax Quick Read – iShares National Muni Bond ETF (MUB) yields 3.5% tax-free with investment-grade credit quality and lowest expenses, while VanEck High Yield Muni ETF (HYD) yields…
32% through below-investment-grade tobacco and Puerto Rico bonds offering 7.6% tax-equivalent returns, and SPDR Nuveen Bloomberg High Yield Muni ETF (HYMB) yields 4.55% with similar exposure but lower concentration risk. – Top-bracket earners facing 40.8% combined federal tax rates on Treasury yields find municipal bonds delivering 5.9% to 7.6% tax-equivalent yields far more attractive than Treasuries’ 2.6% after-tax returns. – Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and VanEck High Yield Muni ETF didn’t make the cut. Grab the names FREE today
The 10-year Treasury yields 4.43%, which sounds competitive until a high earner runs it through the tax screen. At the top federal marginal rate of 37% plus the 3.8% net investment income tax, the after-tax yield collapses to roughly 2.6%. Add state income tax in California, New York, or New Jersey, and the real take-home falls further.
Three municipal bond ETFs are absorbing flows that used to head into Treasuries: the iShares National Muni Bond ETF (NYSEARCA:MUB), the VanEck High Yield Muni ETF (NYSEARCA:HYD), and the SPDR Nuveen Bloomberg High Yield Municipal Bond ETF (NYSEARCA:HYMB). Each fund delivers tax-equivalent yields above 4% for top-bracket investors, and the two high-yield options yield over 4% tax-free. The question is which fund matches the investor’s tolerance for credit and duration risk.