Understanding the First Trust Municipal High Income ETF (FMHI)

What this ETF is trying to do

The First Trust Municipal High Income ETF, known by its ticker symbol FMHI, is a type of fund that focuses on municipal bonds. These are often loans made to local governments. The goal of this ETF is to provide high income to its investors through regular payments.

What the numbers show

As of July 16, 2026, the current price of one share is $48.2679. Looking back at the past year, the price has grown by about 4.19%. When you include the extra money paid out to investors, the total return for the year was 8.79%.

To see how prices change, let's look at an example. Imagine you invested $10,000 into this ETF one year ago when the estimated price was about $46.32 per share. Before any extra payments were added, your $10,000 would have grown to roughly $10,419 based on the price change alone.

Income and distribution explanation

This ETF is designed for people who want regular cash payments. Over the last 12 months, it paid out a total of $2.061 per share. The "distribution yield" is 4.2699%, which tells you how much income the fund pays relative to its price. These payments usually happen once a month, most often on a Thursday.

It is important to remember that a high yield alone can be misleading. A very high percentage might look good, but if the actual price of the ETF is falling quickly, you could lose more money in value than you gain in income.

NAV erosion explanation

"NAV erosion" happens when the value of the underlying assets in an ETF drops over time. If an ETF's share price falls from a high number to a much lower number, it can destroy your "principal." Principal is the original amount of money you put in. If the price collapses, even the monthly income might not be enough to make up for the loss in your initial investment.

Fortunately, this ETF has an erosion score of 94, which is labeled as "Stable / sideways." This means it does not show signs of severe price collapse.

Pros

• The fund shows a history of total returns over one year and three years.

• It provides regular monthly income.

• The price has remained stable rather than crashing.

Cons

• Investors must watch the price to ensure the income is worth the investment.

• Like all bond-related funds, prices can change based on the economy.

Beginner takeaway

Income investors usually prefer ETFs that go "sideways" (stay at a steady price) or move slightly up. They prefer this because it means their original money stays safe while they collect the monthly payments. Because FMHI is labeled as stable, it avoids the danger of severe NAV erosion. Always remember to look at both the yield and the price change together.