Investors pulled more than $530 million from the $3.6 billion fund in September, including a record $360 million in one day.
The Schwab Municipal Bond ETF is on track for its largest monthly outflow since launching in 2022 after a fixed-income selloff pushed municipal-bond yields to their highest levels in months.
Investors have withdrawn more than $530 million from the roughly $3.6 billion fund so far in September. The fund also recorded a single-day withdrawal of $360 million last week.
Schwab holds just over half of the ETF’s outstanding shares, according to Bloomberg-compiled data. The size of the move has led some market watchers to suspect model-portfolio rebalancing.
“This looks like the call is coming from inside the house,” Eric Balchunas, a Bloomberg Intelligence ETF analyst, said. He noted that Schwab’s ownership of its own funds means the firm could have carried out such a large trade.
Jason Diefenthaler, head of active taxable and municipal strategies at Schwab Asset Management, said rising tax-exempt yields have created opportunities for tax-sensitive investors and model providers to reposition their portfolios.
The municipal-bond market has faced pressure from inflation concerns, rising Treasury yields and heavy new issuance. Muni yields surged last week during a Treasury selloff, with the longest-dated securities reaching their highest levels since 2011.
Ten-year benchmark muni yields climbed to their highest since April 2025, when volatility tied to President Donald Trump’s tariff policies unsettled markets.
Patrick Luby, head of municipal research at CreditSights, said weakness in stocks could also be prompting investors to rebalance portfolios by moving money out of fixed income and into equities.
