Rockefeller crashes the high-yield muni bond party with new ETFs

Rockefeller Asset Management is the latest money manager to capitalize on the muni ETF boom. 

The New York-based division of Rockefeller Capital Management is launching its first actively managed fixed income exchange-traded funds. The products, which will be managed by a trio of portfolio managers who joined earlier this year from Invesco Ltd., will focus on lower-rated bonds.

There are now more than 100 muni ETFs with a combined $131 billion as asset managers vie to capture money that’s been flowing into the low-cost and easy-to-trade products. Goldman Sachs Asset Management and PGIM have both launched new funds this year.

Demand has been particularly strong for high-yield muni bonds. The securities are outperforming even US corporate high-yield bonds so far this year, returning over 6%, according to Bloomberg indexes. 

“We believe higher-yielding municipals represent a really compelling asset class,” said Alex Petrone, director of fixed income at Rockefeller Asset Management. She said the securities have a low correlation with equities, which means that they could provide a buffer for investors when there is weakness in the stock market.

Scott Cottier, Mark DeMitry, and Michael Camarella, who previously helped oversee high-yield muni funds at Invesco, will manage the funds.

The Rockefeller Opportunistic Municipal Bond ETF, which will trade with the ticker RMOP, will typically invest at least 50% of its total assets in municipal bonds that have a credit rating of BBB+ or Baa1 or lower.

The company is also launching the Rockefeller California Municipal Bond ETF and the Rockefeller New York Municipal Bond ETF, which will invest in tax-exempt bonds in those states. These funds likely appeal to investors looking to shield their income from high state taxes.

Those two funds can invest up to 25% of their assets in muni bonds that are below investment-grade.