As we have mentioned in the past, Bond ETFs can be a less efficient way to access the fixed income market. For the month of December, the largest Municipal Bond ETF has fallen 2.4% MTD compared to a 73bp decline for the market as a whole (as measured by the Barclay’s Municipal Index). The ETF went from averaging a 1% premium, (i.e. you pay more for the ETF than the bonds are worth) to a 60bp discount (i.e. you sell the ETF for less than the underlying bonds are worth).