The Safeguarded Yield Play: NYLI MacKay Muni Insured ETF (MMIN) Thrives in Rising Rates

In an era of relentless Federal Reserve rate hikes and market volatility, investors seeking stable income face a dilemma: how to preserve capital while outpacing cash equivalents. Enter the NYLI MacKay Muni Insured ETF (MMIN), a fund designed to deliver robust yields while insulating investors from the twin threats of credit risk and rising rates. Let's dissect why this ETF is becoming a cornerstone for tax-sensitive portfolios in 2025.

The Challenge of Rising Rates and MMIN's Solution

As the Fed's benchmark rate climbs toward 6%, traditional bond investors face a stark reality: Treasury yields are still below inflation, and corporate bonds carry heightened default risks. Meanwhile, money market funds hover near 5%, offering little more than a parking lot for cash. MMIN sidesteps these pitfalls by focusing on insured municipal bonds, which combine tax-free income with credit guarantees. This dual focus makes it a compelling alternative for investors chasing yield without compromising safety.

The Active Edge: How MMIN Navigates Volatility

At its core, MMIN is an active management powerhouse, employing three strategies to maximize returns while minimizing risk:

1. Credit Analysis: The MacKay team rigorously evaluates issuers, favoring bonds backed by strong local economies or essential services like education and healthcare.
2. Yield Curve Positioning: By dynamically adjusting the portfolio's duration, the fund capitalizes on shifts in interest rates—critical in an environment where yields are both rising and volatile.
3. Sector Rotation: Allocations pivot between sectors like general obligation bonds and revenue-backed infrastructure projects, ensuring exposure to the highest-value opportunities.

This approach isn't theoretical. As of March 2025, the MacKay Municipal Managers team oversaw $80 billion in assets, with a 29-year partnership between its co-heads, proving their ability to navigate cycles.

Insured Portfolio Construction: Credit Risk Mitigation Done Right

MMIN's portfolio is 100% insured, meaning principal and interest are guaranteed by bond insurers like Assured Guaranty or Berkshire Hathaway's Ambac. This eliminates the risk of issuer-specific defaults, a critical safeguard in a stressed economy. The fund's holdings are also investment-grade, with over 60% of its credit exposure in bonds rated A or higher.

Even in a rising rate environment, this insulation matters. While corporate bonds face downgrades, MMIN's insured structure ensures stability. For instance, its average credit score distribution (FICO 720+ for 60% of loans) reflects a focus on borrowers with strong repayment histories.

A Proven Track Record: The MacKay Team's Expertise

The ETF's success hinges on its management. The MacKay team has co-managed municipal portfolios since 1993, weathering crises from the Great Recession to the 2020 pandemic. Their tenure is matched by results:
- Long-term performance: The team's strategies have delivered consistent returns, outpacing broader municipal indices during rate hikes.
- Risk management: During Q1 2025, the fund's delinquency rate stayed at 2.3%, far below historical averages, thanks to strict underwriting.

Yield Advantage in a Cash-Starved Market

With short-term rates at 5.5%, cash equivalents feel like a losing proposition. MMIN, however, offers a yield-to-worst of 3.8% (as of June 2025), which may seem modest—but remember: this yield is tax-free at the federal level. For a taxpayer in the 22% bracket, that's equivalent to a 4.86% taxable yield. And in a portfolio context, the fund's low correlation to equities adds diversification benefits.

Tax Efficiency: A Winning Formula for Income Seekers

Municipal bonds' tax-exempt status is their crown jewel. For investors in high tax brackets, MMIN's yield becomes a powerhouse:
- State-specific options: While MMIN is national, its insured structure avoids state-specific tax pitfalls.
- Predictable income: Unlike dividend stocks, which can be cut, municipal bonds pay consistent interest until maturity.

Conclusion: Positioning for Stability in an Uncertain Environment

In 2025, MMIN emerges as a rare gem: a fund that combines active management, credit insulation, and tax efficiency. Its focus on insured bonds shields investors from defaults, while its yield outperforms cash for taxable accounts. For retirees or income-focused portfolios, this ETF is a must-consider.

Investment Takeaway:
- Buy for: Tax-sensitive income seekers, risk-averse investors, or those looking to diversify beyond Treasuries.
- Avoid if: You prioritize high-risk, high-reward assets or need immediate liquidity (muni bonds are less traded than stocks).

In a market where safety and yield are inversely related, MMIN proves they can coexist.