State Street launches muni bond ETF

State Street Global Advisor, of Boston, today launched its municipal bond exchange traded fund, the SPDR Lehman Municipal Bond ETF, on the American Stock Exchange.
The ETF allows clients to invest in federal tax-free municipal bonds with highly rated credit.
On average, the securities in the fund’s index have a credit quality of AA1/AAA, according to State Street.
At 0.20%, the annual expense ratio is lower than that of municipal bond mutual funds, which come in at 1.10%
The ETF seeks to match the price and yield of the Lehman Brothers Municipal Managed Money Index, which provides exposure to 22,000 high-grade issues in the municipal bond market.
Hospital, housing and airline bonds, as well as derivatives, taxable municipal bonds, remarketed issues and bonds that are subject to the federal alternative minimum tax have been left off the index.