New York-based asset manager Van Eck Global announced today that its family of municipal bond Exchange-Traded Funds (ETFs) recently passed the $1 billion mark in combined assets under management (AUM).
“Municipal bonds have emerged into the spotlight after long being one of the quieter corners of the investment landscape, and investors and advisors are seeing their current attractiveness as well as the potential benefits offered by investing through ETFs such as those in our Market Vectors suite,” said Jim Colby, portfolio manager and senior municipal strategist with Van Eck Global. “Historically low yields on Treasuries have made the search for yield far more difficult than it’s been in quite some time. In this environment, we’re pleased to offer a range of funds that span the risk/return spectrum, providing a number of choices for income-focused investors as they build their portfolios.”
Colby noted that the growth experienced by Market Vectors’ municipal bond ETFs came even as the muni marketplace was faced with high-profile prognostications of doom at the start of 2011. “Thankfully, the massive wave of defaults that some had predicted did not come to pass,” continued Colby. “In fact, defaults remained at or below historical norms throughout the year.”
Since launching its first municipal bond ETF in late 2007, Van Eck has steadily added to its roster. The firm’s full range of muni-income oriented ETF offerings now includes:
- Market Vectors High-Yield Municipal Index ETF (NYSE Arca: HYD): tracks and index that focuses on the non-investment grade portion of the municipal bond market
- Market Vectors Long Municipal Index ETF (NYSE Arca: MLN): tracks an index that focuses on long-duration bonds with a nominal maturity of 17 years or more; MLN has earned a 4-star Morningstar rating on both a 3-year and overall basis (as of 1/31/12)
- Market Vectors Intermediate Municipal Index ETF (NYSE Arca: ITM): the first muni ETF launched by Van Eck, in December of 2007, this fund tracks an index that focuses on medium-duration bonds with a nominal maturity of 6 to 17 years; ITM has earned a 4-star Morningstar rating on both a 3-year and overall basis (as of 1/31/12)
- Market Vectors Short Municipal Index ETF (NYSE Arca: SMB): tracks an index that focuses on short-duration bonds with a nominal maturity of 1-6 years; SMB has earned a 3-star Morningstar rating on both a 3-year and overall basis (as of 1/31/12)
- Market Vectors Pre-Refunded Municipal Index ETF (NYSE Arca: PRB): tracks an index that focuses on pre-refunded and escrowed-to-maturity municipal securities, meaning the debt obligations are directly issued of unconditionally guaranteed by the US government
- Market Vectors CEF Municipal Income ETF (NYSE Arca: XMPT): the first and only U.S. listed ETF designed to track and index that provide exposure to a basket of municipal bond-focused closed-end funds
As part of the firm’s commitment to investor and advisor education, the company recently launched a weekly blog on the Van Eck Global website titled “MUNI NATION” where Colby shares his thoughts on the state of the muni marketplace, themes and trends of note, key statistics and more. The blog can be found at http://www.vaneck.com/blogs/muni-nation/.
“We’ve been pleased with the interest that our municipal bond ETFs have garnered in the marketplace. We believe it’s important that we continue to do our best to educate and inform investors, potential investors and the advisor community,” said Jan van Eck. “As munis become an ever more important component in building an income portfolio, we plan to remain at the forefront of product development, investor education and market insights.”
Van Eck Global noted, as of the date of this press release that based on Morningstar data, the expense ratios for five of its municipal bond ETFs are currently below the average for their Morningstar categories. * Additionally, the 30-day SEC yields and total returns for this suite of funds currently are competitive versus other ETFs and mutual funds with similar investment objectives. Please visit www.vaneck.com to see the most recent yields and performance.
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*Source: Morningstar as of 1/31/2012. Based on the average expense ratio of ETFs in the following categories: muni short 0.26% (9 funds), muni national intermediate 0.30% (7 funds), muni national long 0.45% (5 funds), muni high yield 0.40% (2 funds) and MLN, ITM, SMB, HYD and PRB expense ratios of 0.24%, 0.24%, 0.20%, 0.35% and 0.24% respectively. The sixth fund in the Market Vectors suite of Municipal bond ETFs is XMPT, (expense ratio 1.57% gross, 1.43% net); which is in the Muni National Long Morningstar category, and has been excluded from this analysis due to acquired fund fees and expenses (AFFE) of its underlying closed-end funds.
©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 metrics. Market Vectors Short Municipal ETF was rated against the following numbers of U.S.-domiciled Muni Short funds over the following time periods: 161 funds in the last three years. With respect to these Muni Short funds, Market Vectors Short Municipal Index ETF received a Morningstar Rating of 3 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: 209 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: 227 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 4 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 $23.7 billion in assets under management, making it the sixth largest ETF family in the U.S. and the ninth largest worldwide as of December 31, 2011.
Market Vectors ETFs are distributed 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 $33.1 billion in investor assets as of December 31, 2011.
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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 investing.
Van Eck Securities Corporation, Distributor, 335 Madison Avenue, New York, NY 10017