The VanEck Short Muni ETF (NYSEMKT:SMB) and Vanguard Short-Term Tax-Exempt Bond ETF (NYSEMKT:VTES) both target the short-end of the municipal bond market, offering federal tax-exempt income with low volatility. Investors seeking to park cash in a tax-advantaged way often look to short-duration municipal bonds. These funds provide a buffer against interest rate swings while keeping money accessible.
While they share similar goals of providing federal tax-exempt income, differences in issuer scale, expenses, and portfolio depth distinguish the two options. Beta measures price volatility relative to the S&P 500; beta is calculated from monthly returns over the available fund history (up to five years). The 1-year return represents total return over the trailing 12 months.
Dividend yield is the trailing-12-month distribution yield. The Vanguard fund maintains a slight cost advantage with a 0.05% expense ratio compared to 0.07% for the VanEck fund. This cost efficiency is a hallmark of Vanguard indexing, though the VanEck fund has recently provided a marginally higher trailing payout for yield-focused investors.
Growth of $1,000 over 3 years (total return) The VanEck Short Muni ETF tracks the ICE Short AMT-Free Broad National Municipal Index, focusing on short-duration, tax-exempt municipal bonds. Its largest positions include the New York City Transitional Finance Authority at 1.05%, Indiana Finance Authority at 1.03%, and Charlotte-Mecklenburg Hospital Authority at 1.03%. The fund holds 335 securities.
It utilizes an ESG screen to filter its holdings. The VanEck Short Muni ETF has paid $0.48 per share over the trailing 12 months, which on its recent ~$17.27 share price works out to a 2.8% yield. The Vanguard Short-Term Tax-Exempt Bond ETF is a fixed income fund, tracking the S&P 0-7 Year National AMT-Free Municipal Bond Index.
The fund is highly diversified, holding 3,373 securities, and no single position exceeds 0.49% of the portfolio. This fund also incorporates an ESG screen into its process. The Vanguard Short-Term Tax-Exempt Bond ETF has paid $2.76 per share over the trailing 12 months, which on its recent ~$100.95 share price works out to a 2.7% yield.
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