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Van Eck Launches New Municipal Bond Index ETF

Van Eck Launches New Municipal Index ETF
February 6, 2009

SAN DIEGO (ETFguide.com) - Van Eck has been one of the more active ETF Providers in the past weeks.

In late January, Van Eck launched the Market Vectors Indonesia Index ETF (NYSEArca: IDX) followed by the Market Vectors Pre-Refunded Municipal Index ETF NYSEArca: PRB) and now the Market Vectors High Yield Municipal Index ETF (NYSEArca: HYD).

 

The Market Vectors High Yield Municipal Index ETF is pegged to the performance of the Barclays Capital Municipal Custom High Yield Composite Index. The index is a market-size weighted index that is designed to track the high-yield segment of the municipal market with enhanced liquidity.

This is the first ETF to focus on high-yield munis. The index has a 25% weighting in investment-grade triple-B bonds and a 75% weighting in non-investment grade bonds. In addition, 75% of the index is in bonds issued as part of transactions of at least $100 million in size.

HYD has an expense ratio of 0.35%. The average credit quality (according to Moody / S&P) of the underlying bond issues is BBB / Ba1. The ETF, which owns 46 securities, takes a sampling approach in its attempt to replicate the performance of the 4,186 holdings strong index. The nominal maturity of the bonds is greater than 1 year.