New York Life Investment Management launched the NYLIM MacKay Muni High Income ETF (NYSE:MMHI), an actively managed ETF targeting high current income exempt from regular federal income tax.
Managed by MacKay Municipal Managers, the fund is expected to invest at least 60% of assets in municipal securities rated BBB+/Baa1 or below, giving investors exposure to higher-yielding municipal bonds alongside investment-grade debt. The strategy excludes distressed and non-accruing securities and uses fundamental credit research and relative-value analysis to assess whether yields adequately compensate for credit risk.
MacKay oversees nearly $87 billion in municipal assets, supported by 30 investment professionals with an average of 20 years of industry experience.
QUICK CONTEXT: Higher Yields Bring More Credit Risk
Higher-yield municipal bonds can offer greater income potential than traditional investment-grade municipal debt, but investors take on additional credit and liquidity risks. MMHI’s mandate places it firmly in this higher-income segment, with at least 60% of assets targeted toward securities rated BBB+/Baa1 or below.
The fund’s active approach is designed to differentiate between issuers where higher yields adequately compensate for risk and those where they do not. For investors in taxable accounts, the federal tax-exempt nature of municipal bond income can further enhance the appeal of the strategy, although tax treatment depends on individual circumstances. The fund’s performance will also remain sensitive to changes in interest rates, municipal credit conditions and broader fixed-income market dynamics.
Photo: Shutterstock