Invesco Taxable Municipal Bond ETF (BAB) - Special muni bonds called Build America Bonds

Special muni bonds category called Build America Bonds seems to offer very decent return as safe bond. For example, one of inexpensive etfs in this muni category, Invesco Taxable Municipal Bond ETF (BAB) , offers 6% coupon rate for half of such bonds in it's portfolio. Overall coupon rate comes out to be in 4.25% range. This seems to have resulted in total return for this ETF for last 1,3,5,10 years timeframe to be in 7.5% range. This is almost 3% higher than Total Bond index for similar time horizons.

These long term muni bonds were mainly issued in 2009-2010 by states/municipalities to finance state level major projects to spur growth after 2008 great recession. Federal government has been providing significant (35%) subsidy towards interest payment to bond issuer. This, in turn, enabled these bonds to offer better rates than traditional munis.

BAB seems to have outperformed broad bonds consistently since it's inception a decade back. For example it has produced double return than broad bonds for last decade. I believe it's because of the federal subsidy which is passed to investors in form of better coupon rate.

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