The Schwab Municipal Bond ETF (SCMB) experienced a record single-day redemption of approximately $360 million on September 14–15. This event contributed to a broader weekly net outflow of $561 million from municipal bond ETFs.
The surge in the 10-year Treasury yield, which rose from 3.9% in late February to 5.0% by mid-September, has pressured municipal bond holdings. SCMB, which manages between $3.55 billion and $4.12 billion in assets, has an expense ratio of 0.03%.
Market data indicates that municipal bond issuance reached nearly $430 billion year-to-date through early September, marking a record high. Meanwhile, the broad municipal market has recorded negative year-to-date returns of approximately 1.7%.
Institutional investors are shifting capital away from long-duration municipal funds toward shorter-duration alternatives. Funds such as the Vanguard Tax-Exempt Bond ETF (VTES) and the JPMorgan Ultra-Short Municipal Income ETF (JMST) have seen notable inflows.
