| Bonds Online |
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| 5/10/2013Market Performance |
| Municipal Bonds |
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S&P National Bond Index
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3.00% |
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S&P California Bond Index
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2.96% |
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S&P New York Bond Index
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3.13% |
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S&P National 0-5 Year Municipal Bond Index
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0.70% |
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| S&P/BGCantor US Treasury Bond |
400.09 |
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| Income Equities: |
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| Preferred Stocks |
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S&P U.S. Preferred Stock Index
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848.03 |
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S&P U.S. Preferred Stock Index (CAD)
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636.26 |
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S&P U.S. Preferred Stock Index (TR)
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1,701.05 |
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S&P U.S. Preferred Stock Index (TR) (CAD)
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1,276.26 |
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| REITs |
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S&P REIT Index
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174.07 |
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S&P REIT Index (TR)
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425.30 |
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| MLPs |
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S&P MLP Index
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2,469.58 |
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S&P MLP Index (TR)
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5,428.50 |
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See Data
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Van Eck Joins Muni ETF World |
By Matthew Posner, The Bond Buyer
August 16, 2007- The floodgates have opened on the municipal bond exchange-traded fund business as Van Eck Securities Corp. filed papers for a family of six muni ETFs that will track indexes provided by Lehman Brothers.
Adding to this, Barclays Global Investors iShares, State Street Global Advisors, and PowerShares Capital Management LLC all filed papers with the Securities and Exchange Commission earlier in the summer, and have since announced plans to add more ETFs to their lines of funds.
What started as two muni ETFs in mid-July has grown into 15 separate offerings from four different companies.
The Market Vectors—Van Eck’s ETF brand name—will focus on specific areas of the municipal bond market. The ETFs will track Lehman indexes that are designed to replicate the bond price movements of short, intermediate, and long-duration bonds, as well as high-yield bonds, California bonds, and New York bonds.
Notably, State Street will also track Lehman indexes, and three of their four planned ETFs will follow the same indexes as Van Eck’s. Barclays and PowerShares are tracking indexes provided by Standard & Poor’s and Merrill Lynch & Co., respectively. Each company has now outlined plans to add state-specific and duration-targeted ETFs to their muni ETF product lines.
As with all previous filings, no expense ratio is offered for the Van Eck ETFs. This will be a major issue for whether these products will be competitive, especially as each will have more specific ETFs that are tracking similar segments of the market. Market analysts have predicted that for the products to be successful, they will need to cost between 0.15% and 0.25%.
For all muni ETF funds proposed so far, at least 80% of all assets must be invested in bonds found in the corresponding index.
The Market Vectors-Intermediate Municipal ETF will track the Lehman Brothers Intermediate Managed Money Municipal Index. To be eligible, a bond must be rated Aa3 and AA-minus or higher by at least two of the three major rating agencies. Bonds must have an outstanding par value of at least $7 million and be issued as part of a transaction of at least $75 million. They must be fixed rate and have a maturity of one to 17 years. No single credit can constitute more then 10% of the index.
Excluded are bonds subject to the alternative minimum tax; hospital, housing, tobacco, and airline-backed bonds, along with re-marketed bonds and derivative products.
The Market Vectors-Long Municipal ETF will track the Lehman Brothers Long Managed Money Municipal Index. The ratings, volume criteria, and bonds excluded are identical to the intermediate index. The difference is that duration of bonds included much be 10 years or more.
The Market Vectors-1-5 Year Municipal ETF will track the Lehman Brothers Short Managed Money Municipal Index. Again, the ratings, volume, and bonds exclusions are identical to the intermediate index. The difference here is that bonds included must have a maturity of one to five years The Market Vectors-High Yield Municipal ETF will track the Lehman Brothers Non-Investment Grade Municipal Index. To be included in the index, bonds must be rated BBB-minus, Baa3, or lower by two of the three major rating agencies. Index constituents must have an outstanding par value of $3 million and be issued as part of a transaction of at least $20 million. The bonds must have a nominal maturity of one or more years. Excluded are taxable munis and derivative products. For this index, tobacco bonds, and AMT bonds are included.
The Market Vectors-California Municipal ETF and the Market Vectors-New York Municipal ETF will track the Lehman Brothers Managed Money Municipal California Index and the Lehman Brothers Managed Money Municipal New York Index. The criteria are the same as the intermediate index, though each track bonds issued only in the index’s namesake state. Also, bonds must have a maturity of one year or more.
Dividends paid out to shareholders are expected to be tax-free. Shares of the funds, issued in creation units of 100,000, will be issued and redeemed on a continual basis to keep the price of each fund close to the net asset value. The exchange that these ETFs will be traded on is not listed in the Van Eck filing.
Portfolio managers for the funds will be Hao-Hung Liao and Edward Kuczma. Van Eck declined to comment for this story.
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