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PZA ETF offers tax-free monthly income with stable payouts despite interest rate risks.

Market News
18 May 2026
24/7 Wall Street
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Bullish
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The Invesco National AMT-Free Municipal Bond ETF (PZA) provides investors in the highest tax bracket with monthly, federally tax-free income by investing in investment-grade municipal bonds exempt from the Alternative Minimum Tax. It has paid over 217 consecutive monthly distributions since 2007, with a tax-free yield around 3.9%, which is attractive compared to taxable bonds after taxes. The fund's credit risk is minimal due to its focus on high-quality bonds, but it faces risks from interest rate fluctuations and bond call provisions that can reduce future yields. Despite price volatility from long-duration bonds, PZA remains a reliable option for steady tax-free income in taxable accounts, though investors should consider lower-cost alternatives with shorter durations if sensitive to fees or price swings.

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