ETFs & Mutual Funds
Muni-Bond ETFs Lure $28 Billion as Mutual Funds Bleed Cash
- Citigroup says market volatility catalyst to greater adoption
- Low costs and model portfolios also spur adoption, bank says
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Market volatility supercharged the growth of municipal-bond exchange traded funds in 2022 at the expense of open-end mutual funds, which may lose some of those assets for good.
Despite the worst market rout in 40 years, investors plowed a record $27.8 billion into municipal-bond ETFs this year, a striking contrast to open-end funds which lost more than $130 billion. As much as half the inflows came from mutual fund holders selling shares at a loss to offset gains and swapping into ETFs, according to estimates by Drew Pettit, director of ETF analysis and strategy at Citigroup Inc.