Best Municipal Bond ETFs (2026)
Which municipal bond fund to hold for tax-exempt income — 10 funds ranked on cost, yield, return, risk and ETFValuer's overall grade.
Every figure on this page is recalculated from market data each day, so the ranking reflects current conditions rather than whenever this page was written. Educational content — not financial advice.
Top Picks Right Now
- cheapest in the group at 0.03%
- largest and most liquid at $48.8B
- best risk-adjusted return (Sharpe 0.77)
Ranked by ETFValuer's overall score. Recalculated every day from live market data — these positions change as the underlying numbers move.
At a Glance
Each superlative is measured within this group of 10 funds, not across the whole market.
All 10 Funds Ranked
| Fund | Category | Cost | Yield | 1Y | 3Y | Volatility | Max DD | Sharpe | AUM | Score | Grade |
|---|---|---|---|---|---|---|---|---|---|---|---|
| 1 VTEBVanguard Tax-Exempt Bond Index Fund ETF Shares | Municipal Bonds | 0.03% | 3.34% | +5.7% | +9.0% | 2.8% | -5.5% | 0.26 | $48.8B | 63.7 | C |
| 2 MUBiShares National Muni Bond ETF | Municipal Bonds | 0.05% | 3.16% | +5.2% | +8.6% | 3.0% | -5.2% | 0.08 | $45.8B | 62.5 | C |
| 3 PZAInvesco National AMT-Free Municipal Bond ETF | Municipal Bonds | 0.28% | 3.64% | +8.2% | +7.4% | 4.2% | -7.8% | 0.77 | $4.3B | 60.3 | C |
| 4 HYDVanEck High Yield Muni ETF | Municipal Bonds | 0.32% | 4.24% | +7.3% | +11.8% | 4.0% | -6.7% | 0.58 | $4.5B | 59.0 | C |
| 5 TFIState Street SPDR Nuveen ICE Municipal Bond ETF | Municipal Bonds | 0.23% | 3.47% | +5.0% | +7.0% | 2.9% | -6.7% | 0.01 | $3.1B | 55.1 | C |
| 6 ITMVanEck Intermediate Muni ETF | Municipal Bonds | 0.18% | 2.92% | +4.3% | +8.2% | 3.0% | -5.7% | -0.22 | $2.2B | 53.9 | C |
| 7 MMITNYLI MacKay Muni Intermediate ETF | Municipal Bonds | 0.30% | 3.86% | +4.7% | +9.9% | 2.6% | -3.9% | -0.11 | $1.5B | 53.6 | C |
| 8 SUBiShares Short-Term National Muni Bond ETF | Municipal Bonds | 0.07% | 2.52% | +2.0% | +9.0% | 1.1% | -1.2% | -2.73 | $11.4B | 53.2 | C |
| 9 SHMState Street SPDR Nuveen ICE Short Term Municipal Bond ETF | Municipal Bonds | 0.20% | 2.66% | +2.1% | +8.3% | 1.4% | -2.0% | -2.16 | $3.5B | 49.7 | D |
| 10 SMBVanEck Short Muni ETF | Municipal Bonds | 0.07% | 2.69% | +2.6% | +10.2% | 1.7% | -1.8% | -1.46 | $314M | 47.9 | D |
Max DD is the deepest peak-to-trough fall over the measurement window. Sharpe ratio measures return per unit of volatility — higher is better. Every figure is recalculated daily.
What Makes a Good Fund Here
Municipal bond interest is generally exempt from federal income tax, which makes the headline yield misleading on its own — a 3% muni yield can beat a 4% taxable yield depending on your bracket. Compare on tax-equivalent yield, not the number printed on the fact sheet.
The ETFValuer score blends trailing return, risk-adjusted return, expense ratio, maximum drawdown, fund size and volatility, each percentile-ranked against the full tracked universe, into a single 0-100 figure graded A+ to F. It is a systematic summary of past data, not a forecast — read it alongside the individual columns rather than instead of them.
Head-to-Head Comparisons
Full metric-by-metric breakdowns for the closest calls in this group.
Frequently Asked Questions
What is the best municipal bond ETF?
VTEB ranks highest of the 10 municipal funds tracked, scoring 63.7 (C). VTEB is the cheapest at 0.03%.
Who should hold municipal bond ETFs?
They mainly benefit investors in higher tax brackets holding bonds in a taxable account. In a tax-advantaged account the exemption is worthless, and a taxable bond fund will usually pay more.
Compare any of these funds directly
Side-by-side metrics, holdings overlap and return correlation for any pair.