In the current climate of high volatility in the equity markets and possible credit loosening by the Federal Reserve, consider ETFs that focus on municipal bonds.
PowerShares Capital Management LLC is planning to launch two new exchange-traded funds (ETFs) that will invest in municipal bonds, representing the firm’s first foray into the fixed income sector.
The two new offerings — the PowerShares Insured Municipal Bond and the PowerShares National Municipal Bond Portfolio–are expected to start trading in October. Both bond portfolios–each will track the performances of rules-based indexes to be provided by Merrill Lynch–will exclude single- and multi-family housing bonds, tobacco bonds, and all securities subject to the Alternative Minimum Tax.
The PowerShares Insured National Municipal Bond Portfolio will be based on the upcoming Merrill Lynch US Insured Core Municipal Securities index, which is designed to track the performance of U.S. dollar-denominated, AAA-rated, insured, tax-exempt long-term debt publicly issued by U.S. municipalities in the U.S. domestic market.
The PowerShares National Municipal Bond Portfolio will be based on the upcoming Merrill Lynch US Core Municipal Securities index, which will be designed to track the performance of U.S. dollar-denominated investment grade tax-exempt long-term debt publicly issued by a U.S. municipality in the U.S. domestic market.