Muni Trims & Portfolio Anxieties

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I spend my days staring at spreadsheets, which, let’s be honest, isn’t exactly a breeding ground for compelling anecdotes. But sometimes, even in the beige landscape of asset allocation, something flickers. Like RMR Wealth Builders quietly shedding $3.4 million worth of the First Trust Managed Municipal ETF (FMB). Not a fire sale, mind you, just a…trim. A polite, portfolio-level haircut. They still hold $16.14 million, which, when you’re dealing with billions, feels less like a holding and more like a persistent, slightly annoying houseguest.

It’s the why that always gets me. Rebalancing? Sure. That’s what we tell the clients. A tidy, logical explanation. But I’ve been doing this long enough to know that sometimes these things are less about optimization and more about someone in a corner office having a bad feeling. A premonition. Or maybe they just really dislike municipal bonds. Who am I to judge?

The FMB now represents 1.29% of RMR’s reportable U.S. equity assets. Which, statistically speaking, is…something. It’s enough to register, but not enough to cause a panic. It’s the portfolio equivalent of that one coworker who always brings a slightly-off dish to the potluck. You eat it, you smile, and you silently hope they don’t make it again next year.

Their top holdings remain predictable: VOO, VUG, VTV. The usual suspects. Broad market exposure. Safe. Boring. I sometimes wonder if anyone actually likes these ETFs, or if we just buy them because they’re there. Like oxygen. Necessary, but hardly inspiring.

FMB was trading at $51.33 as of January 28th, up 4.1% over the year. Which is…fine. It’s not setting any records, but it’s not actively losing money. It’s just…existing. Lagging the S&P 500 by 10.9 percentage points, though. That’s a little like being invited to a party and then spending the whole night in the bathroom. Present, but not participating.

A Closer Look

Metric Value
AUM $2 billion
Price (as of 1/28/26) $51.33
Yield 3.38%
1-year total return 4%

The fund itself is a $2 billion actively managed municipal bond ETF. Tax-advantaged income, they promise. Liquidity, transparency. It sounds so…clinical. Like a particularly well-organized waiting room. I always picture a team of accountants in beige cardigans meticulously sorting through bond paperwork. It’s probably not like that, but the image persists.

FMB’s investment strategy focuses on at least 80% of assets in municipal debt securities exempt from regular federal income taxes, seeking to provide tax-advantaged income. It’s structured as an exchange-traded fund (ETF), offering investors liquidity and transparency, with a competitive expense structure relative to actively managed municipal bond funds. The ETF targets income-oriented investors seeking federally tax-exempt yield through active management of municipal bonds.

The thing about tax-free income is that it’s supposed to be the ballast in a portfolio. The calm, steady presence that doesn’t make you check your phone every five minutes. So, a trim like this isn’t necessarily alarming, but it does make you wonder. Is it a subtle signal that they’re anticipating higher rates? A quiet acknowledgement that the municipal bond market is about to get…interesting? Or did someone just really dislike the color of the fund’s prospectus?

The weighted average effective duration is around 7 years, with a weighted average maturity of 12.68 years. Which means it’s not exactly nimble. Price moves can show up quickly when yields jump. It’s like trying to steer a tanker with a bicycle. Possible, but not advisable. Still, about $1.94 billion in net assets and 1,208 holdings offers some diversification. The 30-day SEC yield was 3.23% in December, or 5.46% on a taxable equivalent basis.

I’ll be watching, of course. We all do. Because in this business, even the smallest trim can tell you a lot about the person holding the scissors.

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2026-01-30 14:02