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Fund Spy

Indexing Comes to Muni-Ville

Passive investing in the municipal market is gaining steam.

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In August 2017,  Vanguard Tax-Exempt Bond Index (VTEAX) turned two years old. The fund remains the market’s only municipal open-end bond index mutual fund. Although still in its youth, the fund's assets had grown to $1.8 billion as of Sept. 30, 2017.

As one of the cheapest funds in the muni national intermediate Morningstar Category at a mere 9 basis points, this fund has fared well relative to peers. These ultralow fees, combined with its strong risk-adjusted returns and efficient tracking of its index since inception, earn it a Morningstar Analyst Rating of Silver.

Elizabeth Foos does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.