RMR Wealth Builders Trims Municipal ETF Stake in Strategic Portfolio Shift
In a recent regulatory filing, RMR Wealth Builders disclosed a partial reduction of its stake in the First Trust Managed Municipal ETF (NASDAQ: FMB), a move that has drawn attention from fixed-income watchers. The wealth advisory sold 66,572 shares in the fourth quarter, a transaction valued at approximately $3.4 million based on average quarterly pricing. Despite the sale, the firm retains a substantial $16.14 million position in the fund, which now represents 1.29% of its reported U.S. equity assets.
The transaction comes as investors weigh the outlook for municipal bonds amid shifting interest rate expectations. The First Trust Managed Municipal ETF, with about $2 billion in net assets, invests in a broad portfolio of over 1,200 municipal debt securities to provide federally tax-exempt income. As of late January, FMB's 30-day SEC yield stood at 3.23%, or a taxable-equivalent yield of 5.46% for investors in higher brackets.
"Portfolio rebalancing is routine, but a meaningful trim in a core municipal holding can signal a reassessment of interest rate risk or liquidity needs," said Michael Thorne, a portfolio manager at Horizon Fixed Income Advisors. "With FMB's weighted average effective duration around seven years, its price is sensitive to yield movements. This could be a prudent risk-management step within a larger equity-dominated portfolio."
The fund's performance has been steady but muted relative to equities, gaining 4.1% over the past year while trailing the S&P 500 by nearly 11 percentage points. For RMR Wealth Builders, whose top holdings are predominantly equity-focused, the reduced ETF allocation may reflect a strategic tilt rather than a wholesale retreat from the tax-exempt sector.
Investor Reactions:
David Chen, CFA, Principal at Oakhaven Strategies: "This looks like a tactical adjustment, not a fundamental rejection of munis. Keeping $16 million invested shows continued conviction in the asset class for tax-advantaged income. They might be freeing up capital for other opportunities or slightly reducing duration exposure."
Sarah J. Miller, Independent Financial Advisor: "It's a smart, measured move. In a rising rate environment, even high-quality muni ETFs can experience volatility. Trimming a winner to rebalance and potentially hedge duration risk is textbook portfolio management for a fiduciary."
Marcus R. Vance, Editor at 'The Bond Skeptic' Newsletter: "This is a quiet but telling retreat. Why sell $3 million if you're so confident? Munis are facing headwinds from potential tax reform and bloated state budgets. That 'still invested' $16 million might just be trapped capital they're slowly unwinding. Advisors are finally waking up to the risks hiding in 'safe' tax-free funds."
Priya Sharma, Senior Analyst at ClearView Wealth Management: "The data suggests a nuanced strategy. The sale proportion is meaningful but not panicked. Given the fund's scale and diversification, this is likely a firm-specific allocation decision, not a commentary on FMB's management or the broader muni market's health."
The filing underscores the active decisions wealth managers are making within the fixed-income sleeve of balanced portfolios, even for strategies designed as long-term, tax-efficient holdings.