Weakness In Muni Bond CEFs Hints At Difficulty Muni ETFs May Face

I just wanted to remind readers that I had been very interested in strange behavior in the municipal closed-end fund market over the past few months (#1, #2, #3), and had speculated that someone knew about something in the works in ETF land.

Back on May 25th in this article on the beginning of a strange summer for these municipal funds, I said:

All in all, for BlackRock and Nuveen, this does not look to be good news. Whether someone has caught wind of a competing ETF or whether this is purely a move on the yield, it's something to keep an eye on.

Personally, I think this is going to be the big test for ETFs. Though much of the success will be based on the underlying index chosen, new though they all might be, taming the illiquid municipal bond market will more than prove that ETF issuers are ready to displace much of the mutual fund market in my eyes.

Comments

[steely]

Weakness in C.E. Muni Bond Funds has had nothing to do with ETF rollout.

[MichaelBommarito]

I've heard a number of arguments about hedge funds, yield movements, and legislation, but none of those seem to explain how started in the second week of May.