BlackRock High Yield Municipal Fund to Merge with iShares High Yield Muni Active ETF in 2025

The reorganization aims to provide cost savings and enhanced trading flexibility for shareholders.

October 30, 2024

BlackRock High Yield Municipal Fund to Transition to ETF Format

BlackRock High Yield Municipal Fund has announced plans for a strategic reorganization into the iShares High Yield Muni Active ETF, scheduled to take effect on February 7, 2025. Approved by the fund’s board, this transition is designed to deliver long-term benefits, such as lower expenses and improved trading flexibility. The reorganization reflects BlackRock's commitment to enhancing its fund offerings in a manner that supports shareholder interests.

Benefits of the ETF Structure for Shareholders

The shift to an ETF format is anticipated to offer multiple advantages for shareholders. As part of an exchange-traded structure, shareholders will have access to potentially lower transaction costs and a more transparent trading environment. Unlike traditional mutual funds, ETFs trade throughout the day, allowing for greater flexibility in managing holdings. BlackRock expects that shareholders will find these benefits align with a modernized approach to fund management.

Requirements for Shareholders Ahead of Transition

Shareholders will need to ensure that their accounts are compatible with ETF holdings by transitioning to a brokerage account that supports ETF transactions. This is particularly important for those currently holding shares in retirement accounts or custodial accounts, as they may require specific handling in the conversion process. BlackRock has emphasized that the reorganization is structured as a tax-free event, with account-specific guidance to assist investors in navigating the change.

Strategic Move Reflects Broader Industry Trends

This reorganization highlights an industry-wide trend where traditional mutual funds are shifting toward ETF formats, offering both operational efficiencies and potential cost benefits for investors. BlackRock’s decision to reformat the High Yield Municipal Fund aligns with these market trends, underscoring the firm's responsiveness to investor demand for flexible, cost-effective investment vehicles. The move positions BlackRock to enhance its municipal bond offerings, keeping pace with the evolving financial landscape.