SHM vs TFI: Which ETF Is Better in 2026?
A metric-by-metric comparison of State Street SPDR Nuveen ICE Short Term Municipal Bond ETF (SHM) and State Street SPDR Nuveen ICE Municipal Bond ETF (TFI) — both Municipal Bonds funds — using ETFValuer's daily-updated rankings.
Educational content — not financial advice. Data as of September 08, 2026. ~5 minute read.
The Verdict
SHM and TFI compete directly — both are Municipal Bonds funds chasing the same job in a portfolio. That makes this a genuine either/or: the index each tracks, what it costs, and how it has handled drawdowns are what separate them, not the broad exposure they give you.
SHM and TFI score almost identically on ETFValuer's model (49.9 vs. 49.9) — the honest answer is that either is a reasonable choice, and the decision comes down to the secondary factors below rather than the headline grade.
Head-to-Head: Every Metric
| SHM | TFI | |
|---|---|---|
| Category | Municipal Bonds | Municipal Bonds |
| Expense ratio | 0.20% | 0.23% |
| Fund size (AUM) | $3.5B | $3.1B |
| Dividend yield | 2.68% | 3.59% |
| 1-year return | +1.07% | +1.83% |
| 3-year return | +8.86% | +8.15% |
| Volatility | 1.32% | 2.81% |
| Max drawdown | -1.67% | -5.48% |
| Sharpe ratio | -2.97 | -1.13 |
| ETFValuer score | 49.9 | 49.9 |
| Grade | D | C |
| Overall rank | #387 | #388 |
Bold marks the better value in each row. "Better" is directional only (e.g. lower cost, higher return) — it isn't a recommendation by itself. See the full methodology.
Cost
SHM is the cheaper fund, charging 0.20% a year versus 0.23% for TFI — a gap of 0.03 percentage points (about $3.00/year on a $10,000 position) that compounds meaningfully over a multi-decade holding period. See the ETF Fee Calculator for the exact dollar impact at your investment size and horizon.
What TFI's Fees Cost You
TFI charges an expense ratio of 0.23% a year, deducted automatically from the fund's value. Small percentages compound into real money — adjust the figures below to see the impact on your own numbers.
Assumes a constant gross return and no additional contributions — a simplification, but it isolates exactly what the expense ratio costs. Try the full fee calculator to model contributions and compare any two funds.
Performance & Risk
Over the trailing 3 years, SHM returned +8.86% versus +8.15% for TFI — a gap of about 0.7 percentage points. On risk, SHM has held up better historically, with a shallower max drawdown (-1.67% vs. -5.48%). TFI currently has the better risk-adjusted return (Sharpe ratio of -1.13 vs. -2.97), meaning it delivered more return per unit of volatility taken on.
How Closely Do They Track Each Other?
Over the last 3.0 years of daily returns (754 shared trading days), SHM and TFI show a strong correlation of 0.791 — clearly related, with room to diverge. There is some genuine differentiation here, but not enough to call these complementary holdings. Pairing them mostly concentrates risk rather than spreading it.
| Measure | Value | What it means |
|---|---|---|
| Daily return correlation | 0.791 | Strong — clearly related, with room to diverge |
| R-squared | 62.5% | 62.5% of SHM's daily moves are explained by TFI's |
| Tracking error (annualised) | 2.91% | Typical yearly spread between the two funds' returns |
| Annualised return over 3.0y | SHM +2.89% · TFI +2.60% | SHM ahead by 0.29 points a year |
Correlation alone understates how far these can drift. Across every rolling 12-month window in the period, SHM finished as much as +4.6 points ahead of TFI at the best extreme and -5.2 points at the worst — a 9.8-point spread between the best and worst year of relative performance. Two funds can correlate tightly day to day and still deliver very different outcomes over any single year you happen to hold them.
Calculated from daily total returns over the trailing 3-year window, recomputed every day this site refreshes. Correlation of 1.00 means the two funds moved in lockstep; 0.00 means their daily moves were unrelated.
Holdings Overlap
SHM and TFI hold 4 of the same companies among their top 10 positions. Those shared names make up 3.8% of SHM and 0.8% of TFI. That's meaningful duplication. The funds aren't interchangeable, but a good share of your money would be riding on the same companies twice.
| Shared Holding | SHM Weight | TFI Weight |
|---|---|---|
| State of California | 2.16% | 0.23% |
| City of New York NY | 0.84% | 0.22% |
| University of California | 0.41% | 0.20% |
| Triborough Bridge & Tunnel Authority | 0.40% | 0.20% |
Compares the top 10 reported holdings from each fund's most recent SEC N-PORT-P filing, so it understates total overlap — funds tracking similar indexes overlap far more deeply than the top 10 alone can show. Search any company across all tracked funds with the Stock Overlap tool.
Which One Should You Pick?
Lean SHM if…
- You want the lower running cost — 0.20% vs 0.23%, about $3 a year less on a $10,000 position
- It has been the calmer ride (1.3% volatility vs 2.8%) with a shallower worst-case fall (-1.7% vs -5.5%)
Lean TFI if…
- Current income matters to you — it yields 3.59% against 2.68%
- You care about return per unit of risk — its Sharpe ratio of -1.13 beats -2.97
Whichever you pick, holding both at full weight is usually the wrong answer — see the overlap and correlation sections above.
Frequently Asked Questions
Is SHM or TFI better?
They're rated almost identically by ETFValuer's model — check the cost and risk sections above for the deciding factor that matters most to you.
Which has the lower expense ratio, SHM or TFI?
SHM currently has the lower expense ratio (0.20% vs. 0.23%).
Can I hold both SHM and TFI?
Yes, and it may be worth doing. SHM and TFI correlate at only 0.79 over the past 3.0 years, so they behave differently enough that holding both is a genuine diversification decision rather than a redundant one. Size each to the role you want it to play.
Go deeper on either fund
Full daily-updated metrics, holdings context, and category peers.