This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Municipal ETFs Perform as Equities Melt Down

Stock quotes in this article: NYF, CMF, SHM

The best newly rated exchange-traded funds for October focused predominantly on the municipal bond market.

Just over half of the funds with new grades from TheStreet.com Ratings hail from this asset class, and that makes sense when you consider that the equity market has again been severely punished in recent months and the Treasury market or government debt market looks increasingly overvalued and due for a correction of its own. The Treasury market will see a marked increase in supply of issues to fund the government's various bailout and other emergency rescue plans.

The current prices on Treasuries is being generated by a flight to quality and represents a level of risk aversion that can only be correlated to a worst-case scenario of a deflationary episode akin to the 1930s. While the chance for a 1930s-like correction is still on the table, we will need far more proof that a deflationary spiral actually is in play. Also, the unemployment rate would have to reach unthinkable levels. For now, we don't have the data to support this theory.

So that leaves us with the municipal bond market, which itself is no real safe haven given that a rising unemployment rate will eventually lead to sharp contractions in state revenues. The states are cutting expenditures to offset some of the revenue shortfall, and of course we can look forward to much higher taxes to pay for everything at the local, state and federal levels. Maybe it's the ability and willingness of the states to tax their citizens through every means possible that makes municipals so appealing right now.

Here in Boston the toll to take the Sumner tunnel is proposed to rise from $3.50 to $7 -- I will need a separate mortgage to pay for that.

Taxing Power Makes Munis More Attractive
Fund Name
Ticker
TSC Grade
One-Month Return
Three-Month Return
Category
iShares S&P NY Municipal Bond
NYF
A-
-3.46
-2.9
Municipal Single State
TDX Independence In Target ETF
TDX
A-
4.36
-4.35
Growth & Income
iShares S&P CA Municipal Bond
CMF
A+
12.58
1.98
Municipal Single State
PowerShares 1-30 Laddered Treasury
PLW
A+
0.06
2.29
Government Bond
SPDR Lehman Short Tr Muni
SHM
A+
-0.09
-1.7
Municipal - National
SPDR Lehman NY Muni Bond
INY
B
3.63
-4.98
Municipal - National
SPDR Lehman CA Municipal Bond ETF
CXA
B+
1.8
-3.81
Municipal - National
ProShares UltraShort MSCI EAFE
EFU
C
-33.54
38.58
Non-US Equity
PowerShares Insured CA Mun Bond
PWZ
C+
-1.03
-6.31
Municipal - National
PowerShares Insured National Mun Bd
PZA
C+
4.82
-7.52
Municipal - National
PowerShares Insured NY Mun Bond
PZT
C+
4.66
-7.39
Municipal - National
ProShares Short MSCI EAFE
EFZ
C+
-13.45
27.62
Non-US Equity
SPDR Lehman Intl Treasury Bond ETF
BWX
C+
3.64
-7.31
Global Income
TDX Independence 2010 ETF
TDD
C+
9.54
-10.53
Growth & Income
Source: TheStreet.com Ratings

Sam Patel, CFA, is the manager of mutual fund research for the TheStreet.com Ratings.

In keeping with TSC's Investment Policy, employees of TheStreet.com Ratings with access to pre-publication ratings data must pre-clear any potential trade through the legal department, and are prohibited from trading any security that is the subject of an unpublished rating revision until the second business day after the rating is published.

While Patel cannot provide investment advice or recommendations, he appreciates your feedback; click here to send him an email.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,042.90 -28.32 -0.17%
S&P 500 1,972.29 -5.51 -0.28%
NASDAQ 4,493.39 -12.4620 -0.28%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs