Strong demand for yield together with historically low interest rates
have fueled investor demand for municipal funds across the yield curve
and credit spectrum
NEW YORK -- (Business Wire)
Vectors High-Yield Municipal Index ETF(NYSE Arca: HYD), has
surpassed $1 billion in assets under management (AUM), it was announced.
HYD is the first high-yield municipal bond ETF, and just the fourth
municipal bond ETF overall, to pass this threshold. This milestone puts
the entire Market Vectors suite of six municipal income ETFs over $2
billion in AUM.
“High yield is far more than a niche in the municipal bond market as it
enables traditional as well as certain for-profit issuers to access
capital at a lower cost than they otherwise could in the taxable
market,” said James Colby, Portfolio Manager and Senior Municipal
Strategist with Market Vectors ETFs. “More significantly, it is an
attractive source of tax-free* yield for investors who seek to augment
their income stream in a yield constrained market. With credit
impairments on the decline, and the low-cost feature of ETFs, a
diversified municipal portfolio such as HYD may be compelling to a
variety of investors.”
HYD currently has a 4 out of 5-star rating from Morningstar in both the
overall and three-year time periods. This rating is an indication of a
fund’s risk-adjusted returns. In addition, HYD has a competitive yield
and lower expense ratio as compared to its ETF and mutual fund
The fund launched in February of 2009 and was the first ETF to provide
investors with access to high-yield
municipal bonds. HYD seeks to replicate as closely as possible, before
fees and expenses, the price and yield performance of the Barclays
Municipal Custom High Yield Composite Index (LMEHTR), which is
calculated using a market value weighting methodology. The index tracks
the high-yield municipal bond market with a 75 percent weight in
non-investment grade municipal bonds and a 25 percent weight in
Baa/BBB-rated investment grade municipal bonds for liquidity.
“In isolating the high-yield muni space with HYD, we’ve provided
investors the kind of targeted exposure many are looking for when making
allocations to different corners of the municipal market,” added Mr.
Colby, who regularly blogs about the municipal bond market at Muni
HYD is part of a suite of ETFs in the Market Vectors municipal income
lineup, which was designed to cover the full risk/return spectrum. The
other funds include Market
Vectors CEF Municipal Income ETF (NYSE Arca: XMPT), Market
Vectors Intermediate Municipal Index ETF (NYSE Arca: ITM), Market
Vectors Long Municipal Index ETF (NYSE Arca: MLN), Market
Vectors Pre-Refunded Municipal Index ETF (NYSE Arca: PRB), and Market
Vectors Short Municipal Index ETF (NYSE Arca: SMB). As of November
HYD, ITM and SMB are each 4-star Morningstar funds on a three-year and
overall basis, while MLN has received 5 stars on an overall and three
More information on HYD and the rest of the Market Vectors municipal
bond ETF family can be found
* Some portions of the distributions from HYD may be subject to the
Alternative Minimum Tax (AMT).
©2012 Morningstar, Inc. All Rights Reserved. The information contained
herein: (1) is proprietary to Morningstar; (2) may not be copied or
distributed; and (3) is not warranted to be accurate, complete or
timely. Neither Morningstar nor its content providers are responsible
for any damages or losses arising from any use of this information. Past
performance is no guarantee of future results.
For each fund with at least a three-year history, Morningstar calculates
a Morningstar RatingTM based on a Morningstar Risk-Adjusted
Return measure that accounts for variation in a fund’s monthly
performance (including the effects of sales charges, loads, and
redemption fees), placing more emphasis on downward variations and
rewarding consistent performance. The top 10% of funds in each category
receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3
stars, the next 22.5% receive 2 stars and the bottom 10% receive 1 star.
(Each share class is counted as a fraction of one fund within this scale
and rated separately, which may cause slight variations in the
distribution percentages.) The Overall Morningstar Rating for a fund is
derived from a weighted average of the performance figures associated
with its three-, five- and ten-year (if applicable) Morningstar Rating
Market Vectors Short Municipal ETF was rated against the following
numbers of U.S.-domiciled Muni Short funds over the following time
periods: 135 funds in the last three years. With respect to these Muni
Short funds, Market Vectors Short Municipal Index ETF received a
Morningstar Rating of 4 stars for the three year period. Market Vectors
Intermediate Municipal Index ETF was rated against the following numbers
of U.S.-domiciled Muni National Intermediate funds over the following
time periods: 218 funds in the last three years. With respect to these
Muni National Intermediate funds, Market Vectors Intermediate Municipal
Index ETF received a Morningstar Rating of 4 stars for the three year
period. Market Vectors Long Municipal ETF was rated against the
following numbers of U.S.-domiciled Muni National Long funds over the
following time periods: 221 funds in the last three years. With respect
to these Muni National Long funds, Market Vectors Long Municipal Index
ETF received a Morningstar Rating of 5 stars for the three year period.
Past performance is no guarantee of future results.
About Market Vectors ETFs
Market Vectors exchange-traded products have been offered since 2006 and
span many asset classes, including equities, fixed income (municipal and
international bonds) and currency markets. The Market Vectors family
currently totals $27.9 billion in assets under management, making it the
fifth largest ETP family in the U.S. and eighth largest worldwide as of
September 30, 2012.
Market Vectors ETFs are sponsored by Van Eck Global. Founded in 1955,
Van Eck Global was among the first U.S. money managers helping investors
achieve greater diversification through global investing. Today, the
firm continues this tradition by offering innovative, actively managed
investment choices in hard assets, emerging markets, precious metals
including gold, and other alternative asset classes. Van Eck Global has
offices around the world and manages approximately $37.8 billion in
investor assets as of September 30, 2012.
Municipal bonds are subject to risks related to litigation, legislation,
political change, conditions in underlying sectors or in local business
communities and economies, bankruptcy or other changes in the issuer’s
financial condition, and/or the discontinuance of taxes supporting the
project or assets or the inability to collect revenues for the project
or from the assets. Additional risks include credit, interest rate,
call, reinvestment, tax, market and lease obligation risk. High-yield
municipal bonds are subject to greater risk of loss of income and
principal than higher-rated securities, and are likely to be more
sensitive to adverse economic changes or individual municipal
developments than those of higher-rated securities. Interest and
principal payments for pre-refunded bonds are funded from securities in
an escrow account. The escrowed securities do not guarantee the price of
these bonds. Municipal bonds may be less liquid than taxable bonds.
There is no guarantee that the Funds’ income will be exempt from federal
or state income taxes, and changes in those tax rates or in alternative
minimum tax rates or in the tax treatment of municipal bonds may make
them less attractive as investments and cause them to lose value.
Capital gains, if any, are subject to capital gains tax. Some portions
of the distributions from HYD and XMPT may be subject to the Alternative
Minimum Tax (AMT).
Fund shares are not individually redeemable and will be issued and
redeemed at their NAV only through certain authorized broker-dealers in
large, specified blocks of shares called “creation units” and otherwise
can be bought and sold only through exchange trading. Creation units are
issued and redeemed principally in kind. Shares may trade at a premium
or discount to their NAV in the secondary market.
Investing involves substantial risk and high volatility, including
possible loss of principal. Bonds and bond funds will decrease in value
as interest rates rise. An investor should consider the investment
objective, risks, charges and expenses of the Fund carefully before
investing. To obtain a prospectus and summary prospectus, which contains
this and other information, call 888.MKT.VCTR or visit vaneck.com/etf.
Please read the prospectus and summary prospectus carefully before
Van Eck Securities Corporation, Distributor, 335 Madison Avenue, New
York, NY 10017
Mike MacMillan/Chris Sullivan, 212-473-4442
Source: Market Vectors
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