Strategic Income in a Rising Rate World: Analyzing the SPDR SSGA My2028 Municipal Bond ETF

In a world where central banks are tightening monetary policy to combat inflation, income-focused investors face a critical question: How to balance yield generation with risk mitigation in a rising rate environment? Municipal bond ETFs, long favored for their tax-exempt returns, have emerged as a compelling solution. Among them, the SPDR SSGA My2028 Municipal Bond ETF (MYMH) stands out as a strategically structured vehicle designed to navigate the dual challenges of rate hikes and liquidity constraints.

Structure: A Target Maturity Framework for Rate Resilience

MYMH is an actively managed target maturity fund, with a focus on U.S. municipal bonds maturing in 2028. This structure inherently reduces exposure to interest rate risk as the fund’s portfolio approaches its liquidation date of December 15, 2028 [1]. By holding bonds with maturities aligned to its target date, MYMH avoids the prolonged duration risks that plague traditional municipal bond ETFs. Its option-adjusted duration of 3.51 years [1]—a measure of sensitivity to rate changes—positions it as a moderate-risk option compared to the broader municipal bond category, which often has durations exceeding five years. This shorter duration means MYMH’s price is less volatile in a rising rate environment, making it a more stable income vehicle.

Yield: Competitive Returns in a Tax-Exempt Framework

The ETF’s yield metrics underscore its appeal. As of August 29, 2025, MYMH reported a 30-Day SEC Yield of 3.23% and an average yield to worst of 3.41% [1]. These figures outpace many traditional municipal bond funds, which have seen yields stagnate or decline amid recent rate hikes. The fund’s focus on investment-grade municipal bonds with an average coupon of 4.81% [1] ensures a steady income stream, while its tax-exempt status amplifies returns for investors in higher tax brackets. For example, a 3.23% yield in a taxable account would need to exceed 4.5% to match the after-tax returns of MYMH for a 35% tax bracket investor.

Liquidity: A Well-Functioning Market

Liquidity is a perennial concern for bond ETFs, but MYMH’s metrics suggest robust trading conditions. The fund’s 30-day average intraday bid-ask spread of 0.08% [1] and a premium/discount to NAV of 0.13% [1] indicate tight pricing and minimal arbitrage risks. These figures are well within the thresholds of high-quality ETFs, ensuring investors can enter or exit positions without significant slippage. Additionally, MYMH’s $4.89 million in assets under management [1]—while modest—reflects a fund that is still in its early innings, with potential for growth as demand for tax-exempt income rises.

Strategic Implications for Rising Rate Environments

The interplay of MYMH’s structure, yield, and liquidity creates a compelling case for its use in a rising rate environment. While municipal bonds typically underperform in such climates due to their long durations, MYMH’s target maturity framework mitigates this risk. As the fund’s bonds mature closer to 2028, the portfolio’s duration will naturally shorten, reducing its sensitivity to rate hikes. This dynamic allows investors to capture current yields without locking in long-term exposure to rate volatility.

Moreover, MYMH’s active management approach enables the fund to adjust its holdings in response to market conditions. For instance, during the 2022–2025 rate hike cycle, the fund’s manager could have prioritized shorter-dated bonds or higher-coupon issues to offset rate pressures. While specific performance data during this period is limited due to the fund’s recent inception [1], its structural advantages suggest it would have fared better than traditional municipal bond ETFs.

Conclusion

The SPDR SSGA My2028 Municipal Bond ETF exemplifies how modern municipal bond ETFs can adapt to rising rate environments. By combining a target maturity structure, competitive yields, and strong liquidity, MYMH offers a strategic income solution for investors seeking to balance risk and return. As central banks continue to navigate inflationary pressures, funds like MYMH will likely play a pivotal role in income portfolios, bridging the gap between traditional bonds and the evolving demands of a higher-rate world.

Source:
[1] SPDR SSGA My2028 Municipal Bond ETF, [https://www.ssga.com/us/en/intermediary/etfs/spdr-ssga-my2028-municipal-bond-etf-mymh]