Market Overview

Market Vectors CEF Muni Bond ETF Debuts Today


Van Eck Global, the sixth-largest U.S. ETF issuer, said its Market Vectors ETF business introduced the Market Vectors CEF Municipal Income ETF (NYSE: XMPT) today, marking the introduction of the first ETF devoted to closed-end municipal bond funds, the largest asset class within the closed-end fund arena.

The new Market Vectors ETF will track the S-Network Municipal Closed-End Fund Index. As of June 30, the index had 88 constituents comprised of 84.4% leveraged municipal fixed income closed-end funds, unleveraged muni bond CEFs at 8.85%, leveraged high-yield muni bond CEFs at 3.83% and unleveraged high-yield muni bond CEFs at 2.92%. according to a statement issued by Van Eck.

The index devotes more of its weight to closed-end funds trading at discounts to their net asset values. “Investors and their advisors have long been attracted to tax-exempt closed-end funds which can offer attractive yield and, in some cases, sell at a discount to underlying value of the portfolio of assets,” Jan van Eck, principal at Van Eck Global, said in a statement.

XMPT, which will have a net expense ratio of 1.43%, will likely pay monthly dividend that may not be subject to regular U.S. federal income tax if reported as exempt interest dividends. XMPT's underlying index has a distribution yield of 6.71%.

The ETF will be the 35th in the Market Vectors lineup and the ninth in the firm's fixed income stable. XMPT will be the sixth new ETF introduced by Market Vectors this year and the third new bond fund.

Van Eck had $22.9 billion in assets under management at the end of June, according to data from the National Stock Exchange.


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