By Matt Hougan

Despite The Wall Street Journal’s worries about Build America Bonds, they can be great for your portfolio, especially if you’re not super-wealthy.

The faint stirrings of economic activity appearing in the US economy is not unsurprising given where we were a few months ago and the monetary and fiscal response that ensued.

Deficit spending in the form of an $870B stimulus bill bailed out several states’ payrolls, extended unemployment benefits to millions, subsidized many ex-worker’s COBRA payments, cut taxes, and funded grants and shovel-ready jobs to buoy local economies.

Following a tremendously successful 2009 that saw more than $40 billion flow into fixed income ETFs, the number of bond ETFs is expected to increase significantly in 2010. In what could be the first of many new product launches, iShares introduced a line of new municipal bond, or “muni,” ETFs on Friday. Unlike existing muni bond products that are generally diversified across maturities, the iShares S&P AMT-Free Municipal Series includes six funds with a planned-end date and targeted range of maturities. The new funds include:

• iShares 2012 S&P AMT-Free Municipal Series (MUAA)
• iShares 2013 S&P AMT-Free Municipal Series (MUAB)
• iShares 2014 S&P AMT-Free Municipal Series (MUAC)
• iShares 2015 S&P AMT-Free Municipal Series (MUAD)
• iShares 2016 S&P AMT-Free Municipal Series (MUAE)
• iShares 2017 S&P AMT-Free Municipal Series (MUAF)

Each of the funds in the series is structured as an open-end fund, which holds AMT-free, investment-grade and noncallable municipal bonds until the final months of its operations, when these bonds begin to mature and the portfolio transitions to tax-exempt cash and cash-like instruments. These targeted new products have the potential to be extremely useful in a number of ways, allowing investors and advisors to fill in holes in fixed income portfolios and implement customized strategies.