- Today
- Holidays
- Birthdays
- Reminders
- Cities
- Atlanta
- Austin
- Baltimore
- Berwyn
- Beverly Hills
- Birmingham
- Boston
- Brooklyn
- Buffalo
- Charlotte
- Chicago
- Cincinnati
- Cleveland
- Columbus
- Dallas
- Denver
- Detroit
- Fort Worth
- Houston
- Indianapolis
- Knoxville
- Las Vegas
- Los Angeles
- Louisville
- Madison
- Memphis
- Miami
- Milwaukee
- Minneapolis
- Nashville
- New Orleans
- New York
- Omaha
- Orlando
- Philadelphia
- Phoenix
- Pittsburgh
- Portland
- Raleigh
- Richmond
- Rutherford
- Sacramento
- Salt Lake City
- San Antonio
- San Diego
- San Francisco
- San Jose
- Seattle
- Tampa
- Tucson
- Washington
First Trust Municipal High Income ETF Offers Tax-Exempt Income But Higher Volatility
Examining the structure, risks, and suitability of this actively managed municipal bond ETF
Apr. 14, 2026 at 5:12pm
Got story updates? Submit your updates here. ›
The complex machinery and infrastructure behind municipal bond markets, representing the institutional forces that provide tax-exempt income to high-earning investors.NYC TodayThe First Trust Municipal High Income ETF (FMHI) is an actively managed municipal bond fund that aims to provide high current income exempt from federal taxes. While FMHI offers a higher yield than many peers, it also has greater interest rate sensitivity and lower credit quality in its portfolio, making it a more volatile option. The fund may appeal to high-income investors looking to hold municipal bonds in taxable accounts, but its risks should be carefully considered.
Why it matters
Municipal bond funds like FMHI can provide tax-advantaged income for investors in high tax brackets, but their risk profiles vary. Understanding FMHI's higher duration, lower credit quality, and active management approach is crucial for determining if it fits an investor's needs and risk tolerance.
The details
FMHI invests primarily in a mix of investment-grade and unrated municipal bonds, aiming to maximize tax-exempt income. However, over 50% of its portfolio is in bonds rated below investment-grade as of March 2026. This contrasts with peers like the PIMCO Intermediate Municipal Bond ETF, which is entirely invested in investment-grade munis. FMHI also has a longer duration of 8.55 years, making it more sensitive to interest rate changes than lower-duration municipal bond funds.
- As of March 31, 2026, FMHI had a weighted average effective duration of 8.55 years.
- As of April 10, 2026, FMHI had a 4.37% annualized yield.
The players
First Trust Municipal High Income ETF
An actively managed municipal bond ETF that seeks to provide high current income exempt from federal taxes.
PIMCO Intermediate Municipal Bond Active Exchange-Traded Fund
A municipal bond ETF with a lower duration of 5.04 years and an investment-grade-only portfolio as of March 2026.
The takeaway
FMHI's higher yield compared to peers comes with greater interest rate risk and lower credit quality, making it a more volatile option. High-income investors in high tax brackets may find its tax-exempt income appealing, but its risks should be carefully weighed against other municipal bond funds.
