MUB vs IEI: A Taxing Question

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The fixed-income game. Always a little dusty, a little slow. These two ETFs, the iShares National Muni Bond ETF (NYSEMKT:MUB) and the iShares 3-7 Year Treasury Bond ETF (NASDAQ:IEI), they’re both playing it. One’s a broadside, the other a scalpel. Let’s see which one cuts deeper.

The Numbers Talk (Mostly)

Metric MUB IEI
Issuer iShares iShares
Expense Ratio 0.05% 0.15%
1-yr Return (Feb 7, 2026) 0.59% 2.61%
Dividend Yield 3.13% 3.51%
Beta 0.25 0.15
AUM $42.61 billion $17.89 billion

IEI’s a neat package, slightly pricier but offering a bit more juice. MUB? It’s the heavyweight. Forty-two billion in assets. That’s a lot of paper, and paper, my friend, has a way of talking back. It means broader diversification, but also a slower ship to turn.

Risk and Reward: A Delicate Balance

Metric MUB IEI
Max Drawdown (5 yr) -11.88% -13.89%
Growth of $1,000 (5 yrs) $916 $898

Five years. A blink in the life of a bond. But it tells a story. IEI took a slightly harder tumble, but MUB didn’t exactly soar. These aren’t rockets, they’re tugboats. Steady, reliable…and occasionally stuck in the mud.

What’s Under the Hood

IEI is pure Treasury. Federally backed, safe as a politician’s promise. Three to seven years to maturity. It’s a clean operation. MUB? It’s a sprawling network of municipal bonds. State and local governments. A little more risk, a little more complexity. But here’s the kicker: tax exemption. That’s where things get interesting.

Uncle Sam lets you keep a little more of your earnings with MUB. Not a fortune, but enough to make a high-income investor take notice. Though state taxes still apply, of course. The IRS always gets its cut, one way or another.

The Bottom Line: A Question of Priorities

IEI’s performance is cleaner, the risk profile tighter. It’s the choice for those who want predictability. But MUB…MUB is a gamble on tax efficiency. It’s a little rough around the edges, a little more volatile. It’s the kind of fund that might just surprise you, or leave you holding the bag.

For a long-term investor, the tax advantages of MUB could be significant. But you need to understand the risks. Lower-rated bonds mean a higher chance of default. It’s not a free lunch. It’s a calculated risk. And in this game, my friend, you always pay one way or another.

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2026-02-08 20:04