Another stoking of geopolitical tensions could easily compel market participants to reduce portfolio risk over the near-term. Such moves could put fresh focus on conservative asset classes, including municipal bonds.
So it’s not a stretch to say ETFs such as the ALPS Intermediate Municipal Bond ETF (MNBD) may benefit risk-off investors in the current environment. The actively managed MNBD serves up a reliable diet of income. It could potentially provide a buffer against geopolitical shocks, but that’s not the only reasons to consider the ETF.
Muni Market Activity Bodes Well for MNBD
Municipal bond issuance remains robust. This highlights the advantages of ETFs such as MNBD; selecting the best individual tax-exempt issues can be burdensome for investors.
“State and local governments issued $498 billion in muni bonds in 2024. They beat that record in 2025, issuing more than half a trillion dollars’ worth. Michael Stanton, head of strategy and communication for BAM Mutual, a company that insures municipal bond issues, puts the final number at around $580 billion. Most of those bonds are newly issued, rather than refinancing of existing bonds,” reported Julie Pattison-Gordon for Governing.
Assets such as MNBD have added appeal when considering some market participants are concerned about equity market multiples. Plus, some fixed income investors want safety and they perceive munis as safer alternatives to corporate bonds and Treasuries.
Amid the aforementioned spates of issuance, demand is sturdy. That’s something that shouldn’t be ignored. Not with 2026 being a midterm election year, indicating state and local politicians will be seeking funding for a variety of projects aimed at wooing voters.
“Several categories showed a sharp increase in the number of bonds issued from 2023 to 2025: The number of education bonds increased by 58 percent, transportation bonds rose 66 percent, and electric power and health-care issues grew 87 percent and 184 percent, respectively,” according to Governing.
Some experts believe that’s while it’s possible the municipal bond market will become saturated, that’s not going to happen anytime soon and issuance could run as high as $550 billion to $600 billion this year because demand supports it and the need for the capital is there.
“Governments will continue to see high demand for new infrastructure to provide affordable housing; meet surging demand for electricity, driven in part by the proliferation of data centers; and adapt for climate risks,” concluded Governing.
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