SSgA Rolls Out Cheaper NY, Cali Muni ETFs

The municipal bond exchange-traded fund saga continues with State Street Global Advisors' launch of its ETFs covering the New York and California muni bond markets, as well as one covering short-term municipal bonds. The SPDR Lehman New York Municipal Bond ETF (INY), the SPDR Lehman California Municipal Bond ETF (CXA) and the SPDR Lehman Short-Term Municipal Bond ETF (SHM) began trading today on the American Stock Exchange.

While it was the second firm to bring a national muni bond ETF to market, trailing Barclays Global Investors' September launch of the iShares S&P National Municipal Bond Fund (MUB) by only a few days with its SPDR Lehman National Municipal Bond ETF (TFI), this time around the ETF provider is coming in third with the launch of its state-specific funds. BGI's New York and California ETFs began trading October 5, and last week PowerShares' fixed income ETFs were launched — among them three insured muni bond ETFs covering the U.S., California and New York markets.

Despite the fact that the California and New York muni bond SPDRs are not the first to market, they are the cheapest, with an expense ratio of 0.20%. BGI's muni bond ETFs' expenses are 25 basis points, while the PowerShares funds are 28 basis points.

SHM, the third fund that SSgA launched yesterday, is the first to cover short-term muni bond ETFs and also has a 20-basis-point expense ratio.

Van Eck, which has also filed to create municipal bond ETFs, has yet to enter the market.

Written by Heather Bell

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