Average Daily Volume
7.2M
Fund Overview
The Vanguard Tax-Exempt Bond ETF (VTEB) is a municipal bond ETF that seeks to track the performance of the S&P National AMT-Free Municipal Bond Index. This index measures the performance of the investment-grade segment of the U.S. municipal bond market, which consists of bonds issued by state and local governments to fund public projects. VTEB provides investors with exposure to a diversified portfolio of tax-exempt municipal bonds, making it particularly attractive for investors in higher tax brackets seeking tax-efficient income. The fund is passively managed, has a low expense ratio, and is designed to offer steady income with relatively lower volatility compared to taxable bonds.
- Asset Class
-
Bond
- Industry
-
Municipal Bonds
- Annual Dividend Rate
-
- Smart Beta
-
No
- Leveraged / Inverse
-
N/A / No
- Dividend Quality - Yield
-
- 3.56 %
- Currency Hedged
-
No
- Portfolio Turnover
-
19 %
- Dividend Date
-
Why Invest in the VTEB ETF?
Potential Benefits
- Tax-exempt income: Interest payments are generally exempt from federal income taxes, making VTEB attractive for high-income investors.
- Low expense ratio: VTEB has one of the lowest expense ratios in the municipal bond ETF category, enhancing net returns.
- Diversification: Provides broad exposure to investment-grade municipal bonds across various states and sectors.
- Liquidity: As an ETF, VTEB offers intraday trading flexibility compared to individual municipal bonds.
- Lower volatility: Municipal bonds typically exhibit lower price volatility than corporate bonds or equities.
Potential Risks
- Interest rate risk: Bond prices fall when interest rates rise, which could negatively impact VTEB's NAV.
- Credit risk: Although rare, defaults or downgrades in municipal bonds could affect performance.
- State-specific risks: Some bonds may be concentrated in states with fiscal challenges.
- Liquidity risk: While the ETF itself is liquid, underlying bonds may be less liquid in stressed markets.
- Alternative Minimum Tax (AMT) exposure: Some bonds may be subject to AMT, affecting tax-sensitive investors.
RSI data unavailable or insufficient history.
Monthly Returns (%)
| Year |
Jan |
Feb |
Mar |
Apr |
May |
Jun |
Jul |
Aug |
Sep |
Oct |
Nov |
Dec |
| 2026 |
+0.5%
|
+1.4%
|
-2.2%
|
+1.1%
|
+0.4%
|
+0.7%
|
-1.7%
|
-0.2%
|
-3.7%
|
+0.2%
|
-
|
-
|
| 2025 |
0.0%
|
+1.3%
|
-1.8%
|
-0.6%
|
-0.5%
|
+0.8%
|
-0.4%
|
+1.0%
|
+2.5%
|
+1.2%
|
+0.3%
|
+0.1%
|
| 2024 |
-0.2%
|
-0.2%
|
0.0%
|
-1.3%
|
0.0%
|
+1.0%
|
+1.2%
|
+0.4%
|
+1.2%
|
-1.2%
|
+1.7%
|
-1.3%
|
| 2023 |
+2.7%
|
-2.3%
|
+2.5%
|
-0.3%
|
-0.6%
|
+0.7%
|
+0.1%
|
-1.1%
|
-2.6%
|
-1.2%
|
+5.7%
|
+2.6%
|
| 2022 |
-2.6%
|
-0.4%
|
-3.0%
|
-2.7%
|
+1.6%
|
-1.6%
|
+2.5%
|
-2.5%
|
-3.0%
|
-1.1%
|
+5.1%
|
-0.3%
|
| 2021 |
+0.3%
|
-1.6%
|
+0.5%
|
+0.9%
|
+0.4%
|
+0.4%
|
+0.5%
|
-0.4%
|
-0.7%
|
0.0%
|
+0.8%
|
0.0%
|
| 2020 |
+1.8%
|
+1.0%
|
-3.5%
|
-1.1%
|
+3.3%
|
+0.7%
|
+1.6%
|
-0.7%
|
+0.1%
|
-0.4%
|
+1.6%
|
+0.8%
|
| 2019 |
+0.5%
|
+0.6%
|
+1.5%
|
+0.5%
|
+1.5%
|
+0.4%
|
+0.9%
|
+1.5%
|
-0.8%
|
+0.1%
|
+0.2%
|
+0.3%
|
| 2018 |
-1.1%
|
-0.6%
|
+0.4%
|
-0.4%
|
+1.2%
|
+0.1%
|
+0.3%
|
+0.1%
|
-0.8%
|
-0.5%
|
+1.0%
|
+1.4%
|
| 2017 |
+0.2%
|
+0.6%
|
+0.2%
|
+0.5%
|
+1.6%
|
-0.2%
|
+0.8%
|
+0.8%
|
-0.5%
|
+0.1%
|
-0.3%
|
+0.9%
|
< -5%
-5% to -2%
-2% to 0%
0%
0% to +2%
+2% to +5%
> +5%
Top Holdings (by weight)
| Symbol |
Company Name |
Weight |
No holdings data available.
Related ETFs: VTEB vs Peers
Comparison highlights key differences on cost, coverage, and focus within sector ETFs.
Investment Strategy
VTEB tracks the S&P National AMT-Free Municipal Bond Index, which includes investment-grade municipal bonds that are exempt from the Alternative Minimum Tax. The index is market-cap weighted, meaning larger issuances have greater representation in the portfolio. The fund holds thousands of individual bonds across various states and public purposes (transportation, education, utilities, etc.). VTEB is passively managed, with periodic rebalancing to maintain alignment with the index. The portfolio primarily holds bonds with maturities between 5-20 years, offering a balance between yield and interest rate sensitivity.
Frequently Asked Questions
Is VTEB's income exempt from state taxes too?
VTEB's income is exempt from federal taxes, but state tax treatment depends on your residence. Many states also exempt interest from bonds issued within that state.
How often does VTEB pay dividends?
VTEB pays monthly dividends, consisting of tax-exempt interest payments from its municipal bond holdings.
What's the difference between VTEB and VTEB's mutual fund share class?
VTEB is the ETF share class, while VWAHX is the mutual fund version. The ETF typically has a lower expense ratio and can be traded intraday, while the mutual fund may have higher minimum investments.
Does VTEB hold bonds from all 50 states?
VTEB holds bonds from most states, with heavier weightings toward larger issuers like California, New York, and Texas. The exact allocation varies with market conditions.
How sensitive is VTEB to interest rate changes?
With an average duration around 6 years, VTEB has moderate interest rate sensitivity. A 1% rise in rates could potentially decrease NAV by approximately 6%, though this would be partially offset by higher reinvestment yields over time.
Industry Overview
The municipal bond market provides financing for essential public projects like schools, highways, and utilities. VTEB offers exposure to this $4 trillion market, focusing on investment-grade bonds exempt from federal taxes. Municipal bonds have historically offered relatively stable returns with lower default rates than corporate bonds. The tax-exempt status makes them particularly valuable for investors in higher tax brackets. VTEB's broad diversification across states and sectors helps mitigate single-issuer risks while providing predictable income streams.
Alternative Comparison
Compared to iShares National Muni Bond ETF (MUB), VTEB has a lower expense ratio (0.05% vs 0.07%) and slightly different index methodology. While both focus on investment-grade munis, MUB includes some AMT bonds that VTEB excludes. SPDR Nuveen Bloomberg Municipal Bond ETF (TFI) takes a more active approach with sector rotation strategies, resulting in higher fees (0.23%). VanEck Vectors High-Yield Municipal ETF (HYD) targets higher-yielding but riskier junk munis, making VTEB a more conservative choice for capital preservation.
Issuer Overview
Vanguard is one of the world's largest investment management companies, known for its low-cost index funds and ETFs. With over $7 trillion in global assets under management, Vanguard pioneered index investing for individual investors. The firm's mutual ownership structure aligns its interests with long-term investor success. Vanguard's fixed income team brings extensive experience in municipal bond markets, applying rigorous credit analysis and risk management to VTEB's portfolio construction.
Conclusion
VTEB represents a core holding for investors seeking tax-efficient income with relatively low risk. Its ultra-low cost, broad diversification, and Vanguard's stewardship make it a standout choice in the municipal bond ETF space. While not completely risk-free, VTEB's focus on investment-grade bonds and tax advantages provide meaningful benefits for appropriate investors, particularly those in higher tax brackets looking to reduce taxable investment income.
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