SCMB Profile
The Schwab Municipal Bond ETF is designed to provide investors with exposure to a broad range of U.S. municipal bonds, focusing on debt instruments that are publicly issued and tax-exempt. The fund tracks an index that measures the performance of U.S. dollar-denominated, investment-grade municipal debt issued by U.S. states, territories, and their political subdivisions. This index encompasses a wide array of bonds, including general obligation bonds and revenue bonds, which are typically issued to fund public projects and services.
The ETF aims to deliver a return that closely mirrors the performance of its benchmark index by investing predominantly in municipal securities that meet the index's criteria for investment grade and tax-exempt status. These bonds are issued by various governmental entities, including state and local governments, and are generally considered lower-risk investments due to their tax-exempt nature and backing by government revenues.
Under normal market conditions, the Schwab Municipal Bond ETF may allocate up to 20% of its net assets to securities that are not included in the index. This flexibility allows the fund to invest in a broader range of securities, potentially including bonds with different credit ratings or from issuers not covered by the index, which can provide additional opportunities for yield or diversification.
The ETF’s strategy is to offer investors a way to gain exposure to the municipal bond market, known for its tax advantages and stability. By focusing on investment-grade securities, the fund seeks to provide a stable income stream and capital preservation, appealing to those looking for a lower-risk investment option with favorable tax treatment. The ETF’s investment approach is designed to closely track the performance of the municipal bond market, while also allowing for some flexibility in security selection to enhance returns or manage risk.
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