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Market Vectors to split shares of municipal bond ETFs

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Specialist investment manager Van Eck Global has announced that the board of trustees of the Market Vectors ETF Trust has approved a split of the shares of the Market Vectors-Lehman Brothe

Specialist investment manager Van Eck Global has announced that the board of trustees of the Market Vectors ETF Trust has approved a split of the shares of the Market Vectors-Lehman Brothers AMT-Free Intermediate Municipal Index, AMT-Free Long Municipal Index and AMT-Free Short Municipal Index exchange-traded funds.

These splits will take place for shareholders of record as of the close of business on October 21 and will be payable on October 23. Fund shares will begin trading on a split-adjusted basis the following day.

The Intermediate Municipal Index and Long Municipal Index ETFs will split on a five-to-one basis, while the Short Municipal Index fund will split three-for-one. The splits will lower the share price of the funds by increasing the number of shares outstanding, but will not change their total value.

Van Eck expects the primary benefit of the move to be that lower share prices will make the funds more accessible to investors. The firm says the splits may also create greater liquidity for the funds and, by extension, facilitate tighter bid-ask spreads.

The Market Vectors family of municipal bond ETFs offers investors seeking to access the tax advantages of the US municipal bond market a choice of short, intermediate and long durations, allowing them to select the level of interest rate risk they wish to take on.

The funds’ yields are generally not subject to the alternative minimum tax, and Van Eck says they are structured to provide potentially superior yields relative to similar products because their underlying indices cover a full spectrum of investment-grade credit ratings in each duration category.

Founded in 1955, Van Eck Global was among the first US money managers to promote diversification through global investing, and the Market Vectors funds include hard assets, international, specialty and municipal bond ETFs with a total of USD4.8bn in assets under management at the end of September.

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