Investor Edge: Muni Bond ETFs

In this installment of CNBC 101 — the investors' mini-seminar — learn the potential advantages of investing via municipal bond ETFs.

Muni exchange-traded funds (ETF):

-Hold basket of state and city bonds
-Often have tax-free yields, many now at record highs

Some have yields higher than taxable yields of similar-termed Treasurys.

  • Click & watch CNBC 101 video for 3 Top Performing Muni ETFs

CNBC's Bertha Coombs notes that the State of California sought to raise $4 billion through bond sales; instead, it amassed $5 billion.

Caveat: Muni yields can be volatile. Some have been moving between 25-50 basis points over the last 10 days.

More Municipal Bond ETFs:

-PowerShares Insured National Municipal Bond Portfolio
-Market Vectors-Lehman Brothers AMT-Free Short Municipal Index
-PowerShares Insured California Muni Bond ETF

Compare with Treasury Bond ETFs:

-iShares Lehman 10-20 Year Treasury Bond
-iShares Lehman TIPS Bond