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Last Friday (January 8, 2010), a new series of municipal bond ETFs with planned end-dates began trading. The iShares S&P AMT-Free Municipal Series are a suite of six distinct funds, each ranging in maturity from 2012 to 2017.

Each of the funds in the series is structured as an open-end fund holding AMT-free, investment-grade, and non-callable municipal bonds. In the final months of operations, when the bonds begin to mature, the portfolios will transition to tax-exempt cash and cash-like instruments. Each fund will mature on a pre-specified date, anticipated to be August 31 of each designated year. However, they do not seek to return any predetermined amount at maturity.

The funds will have an expense ratio of 0.30%. The “overview” links below will eventually contain information on holdings, performance, and other fund data. The “fact sheet” links are pdf documents with index data including sector breakdown, which varies widely between the funds.

  • iShares 2012 S&P AMT-Free Municipal Series (NYSEARCA:MUAA) (overview) (fact sheet pdf) has an underlying index with a weighted average maturity of 2.67 years, coupon of 4.09%, and weighted average price of $99.92 as of 11/30/09 .
  • iShares 2013 S&P AMT-Free Municipal Series (NYSEARCA:MUAB) (overview) (fact sheet pdf) has an underlying index with a weighted average maturity of 3.69 years, coupon of 3.59%, and weighted average price of $102.71 as of 11/30/09 .
  • iShares 2014 S&P AMT-Free Municipal Series (NYSEARCA:MUAC) (overview) (fact sheet pdf) has an underlying index with a weighted average maturity of 4.67 years, coupon of 4.59%, and weighted average price of $111.95 as of 11/30/09.
  • iShares 2015 S&P AMT-Free Municipal Series (MUAD) (overview) (fact sheet pdf) has an underlying index with a weighted average maturity of 5.67 years, coupon of 4.64%, and weighted average price of $112.55 as of 11/30/09.
  • iShares 2016 S&P AMT-Free Municipal Series (MUAE) (overview) (fact sheet pdf) has an underlying index with a weighted average maturity of 6.67 years, coupon of 4.70%, and weighted average price of $112.10 as of 11/30/09.
  • iShares 2017 S&P AMT-Free Municipal Series (MUAF) (overview) (fact sheet pdf) has an underlying index with a weighted average maturity of 7.67 years, coupon of 4.68%, and weighted average price of $111.30 as of 11/30/09.

This new series will allow investors to construct lower-risk muni ladders using a diversified basket of securities in an ETF wrapper as opposed to using individual securities.

Disclosure covering writer, editor, publisher, and affiliates: No positions in any of the securities mentioned. No positions in any of the companies or ETF sponsors mentioned. No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.

Source: iShares End-Date Muni ETFs: Allowing Investors to Construct Lower-Risk Muni Ladders