Investment Advisor Adds Shares of Municipal Bond ETF. Should Retail Investors Follow Suit?

Core Viewpoint - Frisch Financial Group, Inc. has significantly increased its investment in the First Trust Managed Municipal ETF (FMB), acquiring approximately $4 million worth of shares during the third quarter of 2025, indicating a strong confidence in the ETF's performance and potential [1][2]. Company Overview - First Trust Managed Municipal ETF (FMB) is a tax-exempt municipal bond ETF with a market capitalization of $1.89 billion, focusing on a diversified portfolio of municipal debt securities to provide stable income and capital preservation [5]. - As of November 7, 2025, FMB shares were priced at $51.23, reflecting a 3.89% total return over the past year [4]. Investment Strategy - The ETF employs an actively managed strategy, investing at least 80% of its assets in municipal debt securities exempt from regular federal income taxes, targeting income and capital preservation [7]. - FMB offers a competitive dividend yield of 3.4%, making it attractive for income-seeking investors [8]. Performance Metrics - Following the recent acquisition, FMB now represents approximately 3.4% of Frisch Financial Group's 13F AUM, with total holdings amounting to 288,013 shares valued at $14.60 million as of September 30, 2025 [2][3]. - FMB has underperformed the S&P 500 by 9.04 percentage points over the past year, which may be a consideration for potential investors [3]. Comparison with Competitors - While FMB is a viable option for municipal bond investments, it faces competition from other ETFs like the Vanguard Tax-Exempt Bond ETF (VTEB), which offers a similar dividend yield of 3.3% but with a significantly lower expense ratio of 0.03% compared to FMB's 0.65% [9][10].