A new ETF aims to generate profits from municipal bonds.

A new ETF is trying to capture profits in the municipal funds space.

Joanna Gallegos, a member of BondBloxx's team, is the creator of the IR+M Tax-Aware Short Duration ETF (TAXX), which was recently launched.

The co-founder and COO of the firm advised investors to look beyond municipal bond portfolios and consider the relative value of after-tax income when making investment decisions, as stated on CNBC's "ETF Edge" on Monday.

Gallegos views actively managed municipal bond exchange-traded funds as a lucrative investment opportunity in a high-rate climate. Even if the Federal Reserve reduces interest rates this year, she anticipates favorable returns.

As per BondBloxx, approximately 62% of TAXX's investments are in municipal bonds. The top five municipal holdings by state as of Thursday, according to BondBloxx, were Illinois, Pennsylvania, New Jersey, New York, and Alabama.

The ETF offers exposure to corporate and securitized bonds, and the firm claims that the fund's mixed-bond approach provides a broader opportunity to increase after-tax total returns. FactSet describes the fund as "tax-efficient," balancing strong after-tax income opportunities with capital preservation through both municipal and taxable short-duration fixed income securities.

"Gallegos stated that the portfolio's tax-equivalent yield is currently around 6%. Specifically, it is approximately 5.88%. He emphasized that it is a good time to consider taxes."

Since its launch on March 14, TAXX has decreased by 0.2% as of Friday.