Market Vectors High-Yield Municipal Index ETF (HYD), has surpassed USD1bn in assets under management.
HYD is the first high-yield municipal bond ETF, and just the fourth municipal bond ETF overall, to pass this threshold.
The entire Market Vectors suite of six municipal income ETFs now has over USD2bn 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,” says 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 four out of five-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 competitors.
The fund launched in February 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, which is calculated using a market value weighting methodology. The index tracks the high-yield municipal bond market with a 75 per cent weight in non-investment grade municipal bonds and a 25 per cent weight in Baa/BBB-rated investment grade municipal bonds for liquidity.