Bringing you live news and features since 2006 

VanEck launches two corporate bond ETFs


VanEck has launched two new corporate bond exchange-traded funds (ETFs) designed to provide investors with important new tools to enhance their investment grade bond exposures. The VanEck Vectors® Moody’s Analytics IG Corporate Bond ETF (MIG) and the VanEck Vectors® Moody’s Analytics® BBB Corporate Bond ETF (MBBB) are both now trading on the CBOE BZX Exchange, and join VanEck’s highly diversified family of income-focused ETF offerings. 

Bonds are selected for the underlying indices by applying a Moody’s Analytics quantitative credit risk model, which provides investors with forward looking credit risk metrics, including a bond’s EDF (Expected Default Frequency) from which a fair value spread can be determined. The index methodology uses the model to identify bonds that offer attractive spreads relative to their embedded credit risk, and also uses the model to help identify bonds that are at a high risk of being downgraded to non-investment grade. 

“The corporate bond universe is expansive and there can be a great deal of dispersion in terms of where the market is pricing risk and a bond’s fair value. Finding bonds with attractive valuations and achieving outperformance is built upon accurately evaluating a bond’s expected credit risk going forward. Incorporating market implied information into the selection process to evaluate credit risk allows you to do that, particularly in volatile markets,” says Fran Rodilosso, Head of Fixed Income ETF Portfolio Management at VanEck.

Moody’s Analytics, a subsidiary of Moody’s Corporation, is a leading provider of award-winning quantitative credit risk analysis tools. Moody’s Analytics CreditEdge® platform, which provides key inputs for the funds’ underlying indices, combines the industry’s leading probability of default model with cutting edge credit analytics to deliver a tool that can identify relative value and provide early warnings of credit deterioration. 
“We have established a comprehensive set of metrics for early warning detection of credit defaults and downgrades,” says Nihil Patel, Managing Director at Moody’s Analytics. “Our research shows our credit risk metrics can help identify undervalued securities. We are thrilled to be able to offer our credit risk metrics for use in the indices underlying VanEck’s funds.”
MIG, which has an expense ratio of 20 bps, seeks to track the MVIS Moody’s Analytics US Investment Grade Corporate Bond Index (US IG Index). MBBB, which has an expense ratio of 25 bps, seeks to track the MVIS Moody’s Analytics US BBB Corporate Bond Index (BBB Index). Both indexes are rules-based and are the first U.S. investment grade bond indexes to be driven by Moody’s Analytics credit risk modelling. The indices rebalance monthly.

“Moody’s Analytics is the recognised industry leader in credit risk modelling so we are excited to be using their credit risk models and data to power these two new funds,” adds William Sokol, Senior ETF Product Manager at VanEck. “We believe that these funds can offer investors the income potential and outperformance they are looking for without having to assume excessive risk, which is particularly important in this prolonged low yield environment.”

MIG and MBBB join a VanEck corporate bond ETF lineup that also includes the VanEck Vectors Fallen Angel High Yield Bond ETF (ANGL®), which targets “fallen angel” high yield bonds and is ranked No1 out of 392 funds within the Morningstar High Yield Bond Category since inception1, and the VanEck Vectors Investment Grade Floating Rate ETF (FLTR), which focuses on US dollar denominated floating rate notes issues by corporate issuers and rated investment grade and has a unique methodology that seeks to enhance yield potential without increasing interest rate risk.

Latest News

Saving and investing app, Moneybox, has doubled the number of ETFs available on the platform, in the light of ‘growing..
Global X ETFs has announced the appointment of Ryan O'Connor as its Chief Executive Officer effective as of April 8, 2024. ..
Value-driven structured credit investing firm, Angel Oak Capital Advisors, LLC, has announced the completed conversions of two of its mutual..
Confidence in the continuing strength of bitcoin and Ethereum is driving wider interest in altcoins and other digital assets, according..

Related Articles

Frank Koudelka, State Street Global Services
ETF data provider and ETF Express data partner, Trackinsight, has published its Global ETF Survey 2024 Report: ‘50+ Charts on...
Matteo Greco, Research Analyst at Fineqia International writes that bitcoin (BTC) ended the week at approximately USD52,150, showing a notable...
US Distribution Awards trophies
The winners of the first US ETF Distribution Awards at the Exchange conference, hosted by ETF Express and sponsored by...
Thomas Bonville, Clear Street
Just over a year ago, Thomas Bonville joined New York-based, prime brokerage Clear Street as managing director, head of derivative...
Subscribe to the ETF Express newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by