What are the key sectors in high yield municipal bonds (HYD)?

High yield muni sectors: unlike investment-grade munis (dominated by general obligation bonds and revenue bonds from stable public utilities), high yield munis are concentrated in sectors with less governmental backing. Healthcare/hospitals: non-profit hospital systems and continuing care retirement communities (CCRCs) often issue below-investment-grade debt; non-profit hospitals may have thin operating margins and high debt loads that result in below-investment-grade ratings; CCRCs (retirement communities where residents pay large entry fees and monthly fees) are particularly vulnerable in economic downturns and COVID-type events when occupancy falls. Charter schools: non-profit charter schools may lack the governmental backing of traditional public schools; charter school bonds are rated based on each school's operating performance; school closures result in bond defaults. Project finance and special purpose entities: bonds for specific revenue-generating projects (toll roads, parking structures, convention centers); if the project underperforms projected revenues, bond defaults occur. Puerto Rico: Puerto Rico's general obligation bonds and various public corporation bonds have been high yield since Puerto Rico's fiscal crisis; Puerto Rico's 2016 restructuring resulted in significant bondholder losses; Puerto Rico bonds remain a component of some high yield muni indices at various discount prices. Airport and airline sector: bonds backed by specific airline terminal revenues or airline company guarantee; if airlines restructure, the underlying airport bonds can default.

How do municipal bonds differ from corporate bonds as fixed income investments?

Tax treatment: municipal bond interest is exempt from federal income tax (and usually state tax for in-state issuers); corporate bond interest is fully taxable at ordinary income rates; this tax treatment makes munis most attractive to high-tax-bracket investors in taxable accounts; in IRAs and 401(k)s, the tax exemption provides no benefit (tax-advantaged accounts already shelter income from taxes), so munis are suboptimal vs. equivalent-yield taxable bonds in retirement accounts. Credit backing: investment-grade municipal bonds are typically backed by the taxing power of a government (general obligation bonds) or by dedicated revenue streams (toll collections, utility revenues, hospital operating revenues) that are legally pledged to bondholders; the governmental nature of most muni issuers provides some protection — governments have taxing power, can restructure services, and have political incentives to avoid default; corporate bond credit depends entirely on the company's business operations and cash flows. Default history: historically, investment-grade municipal bonds have defaulted at lower rates than equivalent-rated corporate bonds; however, high yield municipal bonds have had some spectacular defaults (Detroit, Puerto Rico, Jefferson County AL); the comparison is more mixed for below-investment-grade credits. Market structure: the muni market is extremely fragmented — approximately 50,000+ issuers with millions of individual bond issues; each muni is unique (different issuer, maturity, coupon, purpose, legal structure); unlike the corporate bond market, there are no liquid standardized muni benchmark bonds; trading is primarily through dealer networks with less price transparency than corporate bonds.

What is the Alternative Minimum Tax (AMT) and why does MUB exclude AMT bonds?

AMT basics: the Alternative Minimum Tax is a parallel income tax system designed to ensure that high-income taxpayers pay a minimum amount of tax regardless of deductions and credits; the AMT has different rules from regular income tax, eliminating or limiting many deductions; individual taxpayers calculate their regular tax liability and their AMT liability, then pay whichever is higher. Municipal bond AMT treatment: most municipal bonds are fully exempt from both regular income tax and AMT; however, some municipal bonds (particularly private activity bonds, or PABs) are exempt from regular income tax but subject to AMT; private activity bonds are munis issued to finance private projects (airports, certain nonprofit facilities, industrial development) but that qualify for tax-exempt treatment because they serve a public purpose. Why MUB excludes AMT bonds: MUB tracks the 'ICE AMT-Free US National Municipal Bond Index' — which explicitly excludes bonds subject to AMT; MUB's prospectus guarantees that no MUB holdings will trigger AMT liability for investors; this makes MUB simpler and appropriate for AMT-affected investors who want to ensure their muni income remains fully tax-exempt without specialized AMT-aware tax planning. HYD and AMT: HYD's below-investment-grade and unrated bonds may include private activity bonds subject to AMT; investors considering HYD should verify the fund's AMT exposure with their tax advisor, particularly if they are subject to AMT or near the AMT threshold.

brimindinvest.com / compare / hyd-vs-mubLIVE

HYD

VanEck High Yield Muni ETF · ETF - High Yield Municipal Bonds (Below Investment Grade)

$51.34

+0.53% this month

VERSUS

⟷

COMPARE

MUB

iShares National Muni Bond ETF · ETF - Investment Grade Municipal Bonds

$106.91

+0.24% this month

Scoreboard verdict

Across expense ratio, momentum, yield, fund size, risk

HYD

2

MUB

3

MUB LEADS 3/5

Comparison scoreboard

MUB LEADS 3/5

Exp. Ratio

HYD 0.32%

MUB ✓0.05%

1Y Return

HYD ✓+7.15%

MUB +5.72%

Div. Yield

HYD ✓4.24%

MUB 3.16%

AUM

HYD $4.52B

MUB ✓$45.82B

Beta

HYD 0.35

MUB ✓0.24

Metrics last refreshed: 7/9/2026

Quick take

HYD vs MUB ETF Comparison: AI Score, Valuation, Performance and Upside

HYD (VanEck High Yield Muni ETF) and MUB (iShares National Muni Bond ETF) are both municipal bond ETFs providing federal tax-exempt monthly income — HYD provides higher yields from below-investment-grade and unrated municipal bonds with greater credit risk and sector concentration in healthcare and project finance, while MUB provides broad investment-grade muni exposure at extremely low cost (0.05%) with maximum credit quality and trading liquidity.

HYD vs MUB is high yield municipal bond exposure with elevated tax-exempt income (VanEck's below-investment-grade muni selection, higher yields amplified by tax exemption for high-bracket investors, and monthly distributions — managing muni-sector default risk, healthcare concentration, and lower liquidity) versus investment-grade municipal bond index with minimal credit risk and near-zero cost (iShares' 5,000-bond diversified portfolio at 0.05% expense ratio, largest muni ETF liquidity, and federal tax-exempt income — lower yield than high yield alternatives and interest rate duration sensitivity).

Live analysis · updated 7/9/2026

MUB holds the edge across 3 of 5 key metrics in this comparison. HYD has delivered stronger 1-year price return (+7.15% vs +5.72% for MUB).

Normalized 1Y performance

HYD

MUB

Recent returns

HYD

MUB

Who should consider this stock?

HYD may suit investors who:

→Want higher tax-exempt income from below-investment-grade municipal bonds, with the federal tax exemption amplifying the yield advantage particularly for investors in the 32-40%+ combined federal/state tax brackets
→Accept municipal bond credit risk (hospital defaults, project finance failures, governmental distress) in exchange for significantly higher yields than investment-grade muni alternatives
→Seek tax-exempt income for taxable accounts as a complement to investment-grade munis, with the higher yield of HYD potentially justifying the additional credit risk

MUB may suit investors who:

→Want maximum diversification and credit quality in their tax-exempt municipal bond allocation at extremely low cost (0.05%), using the largest and most liquid muni bond ETF
→Value investment-grade credit quality that minimizes municipal default risk while still providing federal tax-exempt income suitable for high-bracket taxpayers
→Use MUB as a core fixed income holding in taxable accounts where the federal tax exemption meaningfully improves after-tax returns vs. equivalent-yield taxable bonds

Performance & AI score

Metric	HYD	MUB
ETF score	32.0	62.0
Latest close	$51.34	$106.91
1M return	+0.53%	+0.24%
6M return	+2.35%	+0.86%
1Y return	+7.15%	+5.72%

$10,000 invested — hypothetical growth (dividends reinvested)

How much would $10,000 be worth today if invested at the start of each period, with all dividends reinvested?

Period	HYD	MUB
1Y ago	$11.17K (+11.7%) started 2025-07-08	$10.89K (+8.9%) started 2025-07-08
5Y ago	$12.3K (+23.0%) started 2021-07-08	$11.92K (+19.2%) started 2021-07-08
10Y ago	$25.53K (+155.3%) started 2016-07-08	$15.81K (+58.1%) started 2016-07-08

Hypothetical — past performance does not guarantee future results.

Fund characteristics

Metric	HYD	MUB
Expense ratio	0.32%	0.05%
Total assets (AUM)	$4.52B	$45.82B
Dividend yield	4.24%	3.16%
Trailing P/E	N/A	N/A
Beta	0.35	0.24
52-week change	7.15%	5.72%

Risk & fund metrics

Metric	HYD	MUB
1Y return	+7.15%	+5.72%
6M return	+2.35%	+0.86%
1M return	+0.53%	+0.24%
1Y Sharpe ratio	0.63	0.39
Beta	0.35	0.24
Dividend yield	4.24%	3.16%
5Y CAGR	-0.31%	+0.71%

Drawdown & downside risk

Lower drawdown and smaller single-period drops generally indicate a smoother ride, though they do not guarantee lower future risk.

1Y risk snapshot

HYD max drawdown3.20%

MUB max drawdown2.79%

HYD max wkly drop2.05%

MUB max wkly drop1.45%

5Y risk snapshot

HYD max drawdown20.72%

MUB max drawdown11.89%

HYD max wkly drop7.12%

MUB max wkly drop3.24%

10Y risk snapshot

HYD max drawdown35.60%

MUB max drawdown13.68%

HYD max wkly drop27.04%

MUB max wkly drop9.33%

Performance metrics by period

Period	Metric	HYD	MUB
1Y	Growth	+7.15%	+5.72%
	CAGR	+7.16%	+5.73%
	Sharpe ratio	0.63	0.39
	Max drawdown	3.20%	2.79%
	Max daily drop	1.13%	0.88%
	Max wkly drop	2.05%	1.45%
5Y	Growth	-1.55%	+3.60%
	CAGR	-0.31%	+0.71%
	Sharpe ratio	-0.71	-0.91
	Max drawdown	20.72%	11.89%
	Max daily drop	4.72%	1.82%
	Max wkly drop	7.12%	3.24%
10Y	Growth	+33.00%	+19.83%
	CAGR	+2.89%	+1.83%
	Sharpe ratio	-0.06	-0.52
	Max drawdown	35.60%	13.68%
	Max daily drop	18.27%	6.15%
	Max wkly drop	27.04%	9.33%

Fund overview

Category	HYD	MUB
Fund name	VanEck High Yield Muni ETF	iShares National Muni Bond ETF
Type	ETF	ETF
Expense ratio	0.32%	0.05%
Total assets (AUM)	$4.52B	$45.82B
Dividend yield	4.24%	3.16%

HYD strengths

→Higher tax-equivalent yields than investment-grade munis for high-bracket taxpayers — a high yield muni yielding 4.5% tax-exempt is equivalent to a taxable bond yielding 7.5%+ for investors in the 40%+ combined federal/state bracket; this yield pickup is the primary reason to hold high yield munis
→Municipal bond defaults are historically lower than equivalent corporate bond defaults — while municipal bonds can and do default (Detroit 2013, Puerto Rico 2016, various hospital and senior living facility bonds), the overall municipal default rate is lower than corporate bonds at comparable credit ratings; the governmental/public benefit nature of many muni projects provides additional political support
→Monthly income distributions with federal tax exemption suit income-focused high-tax-bracket investors — the combination of monthly income and federal (and often state) tax exemption makes HYD efficient for taxable accounts of high-bracket investors

MUB strengths

→Extremely low expense ratio (0.05%) for investment-grade municipal bond exposure — MUB's near-zero cost is well below most actively managed muni mutual funds (0.40-1.00%); the cost advantage compounds significantly over long holding periods
→Broad investment-grade credit quality reduces credit risk to very low levels — MUB's 5,000-6,000 bond portfolio of investment-grade munis provides excellent diversification; the probability of significant losses from credit events in an investment-grade muni portfolio is very low
→Largest muni ETF with exceptional trading liquidity — MUB's $25B+ AUM makes it extremely liquid; institutional-scale trades execute at tight spreads; MUB is often used by institutions for core tax-exempt fixed income allocations

Risks to watch — HYD

→High yield municipal default risk is real and episodic — Puerto Rico's $70+ billion debt restructuring, Detroit's municipal bankruptcy, and periodic hospital/senior living facility defaults demonstrate that high yield munis do default; credit research matters significantly in high yield munis
→Credit quality concentration in specific sectors (hospitals, senior living, project finance) creates sector risk — high yield munis are heavily concentrated in healthcare (hospital bonds, continuing care retirement communities), which faced severe stress in 2020 COVID; sector diversification is limited in high yield munis
→Muni market liquidity is lower than comparable corporate or treasury bond markets — municipal bonds are a fragmented, dealer-driven OTC market; many high yield muni bonds are small issues with limited secondary market trading; liquidity can deteriorate significantly in stress environments

Risks to watch — MUB

→Lower yield than high yield munis — investment-grade munis have lower yields than high yield munis; for investors willing to accept credit risk, HYD provides significantly higher tax-exempt income than MUB
→Interest rate sensitivity — investment-grade muni bonds have longer duration than high yield munis (higher quality bonds are often longer maturity); MUB's portfolio has meaningful interest rate risk; rising rates cause MUB's share price to decline
→AMT exposure — MUB specifically excludes Alternative Minimum Tax (AMT) bonds; investors subject to the AMT should confirm their muni holdings' AMT status; private activity bonds (PABs) are excluded from MUB

Frequently asked questions

Municipal bond definition: a municipal bond (muni) is a debt security issued by a state, county, city, school district, public agency, public university, public hospital, airport authority, water/sewer utility, or other government-related entity to fund public projects; proceeds are used for schools, roads, bridges, water treatment facilities, hospitals, airports, and other public infrastructure. Tax exemption basis: under the federal tax code, interest income from most municipal bonds is exempt from federal income tax; this exemption exists because the federal government does not tax state and local government financing (under the principle of reciprocal immunity between levels of government); additionally, most states exempt interest on their own state's municipal bonds from state income tax (though not necessarily other states' munis). Tax-equivalent yield: to compare a tax-exempt muni to a taxable bond, calculate the 'tax-equivalent yield' = muni yield / (1 - marginal tax rate); for an investor in the 37% federal bracket plus 5% state = 42% combined bracket: a 3.5% muni yield = 3.5% / (1 - 0.42) = 6.03% tax-equivalent yield; this means a taxable bond must yield 6.03% to provide the same after-tax income as the 3.5% muni; for high-bracket investors, the tax benefit makes munis extremely competitive vs. taxable bonds.

AI Prediction SignalNext 5 trading days

Members only

HYD

+2.8%BUY

MUB

+1.1%HOLD

Start Free Trial Log in

ML model trained on historical prices · 14-day free trial · No credit card required

Free public comparison

Want deeper AI forecasts?

This comparison page is public and free forever. Subscribers can unlock saved watchlists, full AI rankings, detailed forecasts, and interactive analysis tools.

Start Free Trial Read Investing Guides

Related comparisons

MUB vs VTEB

Which Municipal Bond ETF Is Best for Tax-Sensitive Investors?