State Street Global Advisors has a new municipal bond exchange-traded fund.

The SPDR VRDO Municipal Bond ETF, which began trading Thursday on the NYSE Arca Exchange, has an annual expense ratio of 0.20%.

The fund is designed to give investors access to municipal variable-rate demand obligations, an asset class offering yields and income that is exempt from federal taxes and often state and local income taxes.

Specifically, it seeks to track the price and yield performance of the Standard & Poor's National AMT-Free Municipal VRDO Index, which includes VRDOs that have been issued by states, local governments and agencies.

As of Sept. 21 the index had exposure to more than 377 issues.

Variable-rate demand obligations are often issued with maturities of up to 30 or 40 years.

According to Standard & Poor's research, the number of VRDO issues rose 32% last year.

This is State Street Global Advisors' fifth municipal bond exchange-traded fund. As of Aug. 31 the State Street Corp. unit had $1.4 billion in municipal bond exchange-traded fund assets under management. At midyear it had $160 billion of total ETF assets under management.

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