BlackRock, Vanguard muni ETFs see record inflows after bond rout

When bond markets get ugly, investors don’t experiment. They go home to the brands they trust. That instinct just played out in spectacular fashion across the municipal bond ETF landscape, where BlackRock’s iShares National Muni Bond ETF (MUB) and Vanguard’s Tax-Exempt Bond ETF (VTEB) recorded their largest weekly inflows ever, even as a broader muni rout sent competitors scrambling to stop the bleeding. The timing is what makes this interesting. These record inflows arrived on the heels of a municipal bond selloff that pushed muni yields to multi-month highs, with the 10-year benchmark exceeding levels last seen in April 2025. Rising inflation concerns, climbing Treasury rates, and a glut of new bond issuance all conspired to shake investor confidence in the tax-exempt corner of fixed income. The great muni shakeout The clearest casualty of the rout was Schwab’s Municipal Bond ETF (SCMB), which absorbed a $360 million single-day outflow, a record for the fund. Total redemptions from SCMB exceeded $530 million by mid-September 2026, making it the product’s most brutal stretch since launching in 2022. The fund’s assets dropped to roughly $3.6 billion. SCMB wasn’t alone in the pain. ...