VanEck CEF Muni Income ETF (BATS:XMPT), Quote.Headers.trade-ideas

VanEck CEF Muni Income ETF

The fund normally invests at least 80% of its total assets in investments the income from which is exempt from U.S. federal income tax (other than federal alternative minimum tax). It normally invests at least 80% of its total assets in securities of issuers that comprise the funds benchmark index. The CEFMX Index is comprised of shares of U.S.-listed closed-end funds.

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All things considered, the municipal bond market had an exceptional 2020. 

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The following post was written and/or published as a collaboration between Benzinga&rsquo;s in-house sponsored content team and a financial partner of Benzinga.
All things considered, the municipal bond market had an exceptional 2020.&nbsp;
In a year in which municipalities were faced with an economic crisis that had some investors concerned about defaults, the <a href="https://www.vaneck.com/etf/income/xmpt/overview/?utm_source=article&amp;utm_medium=benzinga">VanEck Vectors CEF Municipal Income ETF</a> (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/xmpt#NYSE">XMPT</a>) rose 3.44% in 20201, a stunning turnaround given its sharp decline during March (<a href="https://www.vaneck.com/etf/income/xmpt/overview/?utm_source=article&amp;utm_medium=benzinga">click here, to view the fund&rsquo;s standardized performance</a>).
Muni bond investors have several tailwinds to thank for that rebound, according to VanEck Senior ETF Product Manager Michael Cohick: a supply-demand imbalance driven by fewer bond issuances, the realization that municipalities are in a better position than the financial crisis of 2008, and the Federal Reserve, whose municipal liquidity facility acted as a lender of last resort.
&ldquo;Although only used by two issuers, simply the fact that the municipal lending facility was put in place brought tremendous calm and reassurance to the market,&rdquo; he said. &ldquo;We also saw that municipalities, state and local governments, were in a much better position in terms of fiscal health and reserve funds than they were in 2008 to allow them to weather the storm. So I think these provided a backstop to the market.&rdquo;
<img alt="image2_2.png" src="https://www.benzinga.com/files/u91860/image2_2.png" style="height:402px; width:685px" /> 
Source: St. Louis Fed2
<h3>The 2021 Outlook</h3>
Going forward, Cohick believes demand for muni bonds will continue to rise as investors search for yield in light of historically low U.S. Treasury rates, a falling dollar, and increased fears of rising inflation.&nbsp;
There&rsquo;s also the political environment to consider. A Biden administration and Democrat-controlled Congress are likely to unwind some Trump tax cuts. Anticipation of this is already creating investor demand for muni bonds for their tax-exempt qualities.&nbsp;
Unlike other fixed income assets, municipal bonds have one key tax advantage: the interest generated from the bonds is exempt from federal income taxes. As a result, some investors may seek out municipal bond exposure to shield themselves from higher tax rates.&nbsp;
&ldquo;There&#39;s anticipation for higher taxes, which is going to potentially lead to very strong demand for tax-exempt paper from investors across the board,&rdquo; Cohick said. &ldquo;Broadly speaking, the yield environment that we find ourselves in is making investors search for attractive pockets of the market to add income to their portfolios.&rdquo;
<h3>Gaining Exposure To Muni Bonds</h3>
Many investors looking for municipal bond exposure will do so via a mutual fund or ETF, such as XMPT, which allows them to broadly diversify across states, sectors, quality, and asset class.&nbsp;
Unlike most typical broad-based muni bond funds however, XMPT is structured as an ETF that holds municipal bond closed-end funds, or &ldquo;CEFs.&quot;&nbsp;
The closed-end structure of XMPT&rsquo;s underlying holdings allows those fund managers to effectively use leverage, meaning they borrow at low rates in the short end of the marketplace and buy long-dated municipal bonds with higher yields.&nbsp;
Also, because CEFs have a set number of shares, they cannot rely on the creation-redemption mechanism of ETFs that generally acts to keep a fund&rsquo;s share price close to its net asset value (NAV). As a result, closed end funds have a tendency to trade with wide discounts to their net asset value.&nbsp;
In other words, the closed-end fund nature of XMPT gives it the potential to offer investors attractive income from a high-quality portfolio.&nbsp;
&ldquo;Both leverage and systematic approach to buying assets at a discount create a yield advantage,&rdquo; Cohick said. &ldquo;The rules governing XMPT&rsquo;s index provide a systematic way to invest in CEFs exactly how professionals do: buying municipal closed-end funds trading at wider discounts and selling funds trading at higher premiums.&rdquo;&nbsp;
The chart below shows the taxable-equivalent yield of XMPT, against the 7-year, 10-year, 20-year, and 30-year U.S. treasury nominal or pre-tax yields. You can see how the yield from XMPT is greater than the benchmarks. This is due to the underlying holdings being closed-end funds.&nbsp;
<img alt="unnamed_21.png" src="https://www.benzinga.com/files/u91860/unnamed_21.png" style="height:261px; width:512px" /> 
Source: U.S. Department of Treasury, VanEck. As of 12/31/2020
&nbsp;
1. VanEck data 
2. https://www.stlouisfed.org/publications/regional-economist/fourth-quarter-2020/how-covid-affected-municipal-bond-market
The preceding post was written and/or published as a collaboration between Benzinga&rsquo;s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. This content is for informational purposes only and not intended to be investing advice.
Important Disclosures:&nbsp;&nbsp;
This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, or tax advice. Certain statements contained herein may constitute projections, forecasts and other forward-looking statements, which do not reflect actual results, are valid as of the date of this communication and subject to change without notice. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. The information herein represents the opinion of the author(s), but not necessarily those of VanEck.
Index returns are not Fund returns and do not reflect any management fees or brokerage expenses. Certain indices may take into account withholding taxes. Investors cannot invest directly in the Index. Returns for actual Fund investors may differ from what is shown because of differences in timing, the amount invested and fees and expenses. Index returns assume that dividends have been reinvested.
The Fund&#39;s performance, because it is a fund of funds, is dependent on the performance of the Underlying Funds. The Fund is subject to the risks of the Underlying Funds&#39; investments, and the Fund&#39;s shareholders will indirectly bear the expenses of the Underlying Funds. In addition, at times certain segments of the market represented by the Underlying Funds may be out of favor and underperform other segments. The shares of a closed-end fund may trade at a discount or premium to its net asset value (&quot;NAV&quot;). Additionally, the securities of closed-end investment companies in which the Fund will invest may be leveraged. As a result, the Fund may be indirectly exposed to leverage through an investment in such securities. An investment in securities of closed-end investment companies that use leverage may expose the Fund to higher volatility in the market value of such securities and the possibility that the Fund&#39;s long-term returns on such securities (and, indirectly, the long-term returns of the Shares) will be diminished. An investment in the Fund may be subject to risks which include, among others, market, municipal securities, high yield securities, credit, interest rate, call, tax, liquidity, leverage, anti-takeover measures, non-diversified, investment restrictions, operational, index tracking, authorized participant concentration, no guarantee of active trading market, trading issues, passive management, fund shares trading, premium/discount risk and liquidity of fund shares, non-diversified and concentration risks, all of which may adversely affect the Fund. A portion of the dividends you receive may be subject to the federal alternative minimum tax (AMT). There is no guarantee that Fund&#39;s income will be exempt from federal, state or local income taxes, and changes in those tax rates or in alternative minimum tax or in the tax treatment of municipal bonds may make them less attractive as investments and cause them to lose value.
S-Network Municipal Bond Closed-End Fund IndexSMis calculated and maintained by S-Network Global Indexes, Inc. S-Network does not sponsor, endorse, or promote the Fund and bears no liability with respect to the Fund or any security.
Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider the investment objective, risks, charges and expenses of the Fund carefully before investing. To obtain a prospectus and summary prospectus , which contains this and other information, call 800.826.2333 or visit&nbsp; vaneck.com/etfs. Please read the prospectus and summary prospectus carefully before investing
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Municipal bond investors can breathe a sigh of relief now that the fiscal cliff debate has been put to bed without new tax treatment of municipal bond interest. During the cliff debate, municipal bond investors endured a major scare as <a href="http://www.benzinga.com/markets/bonds/12/12/3168476/muni-bond-etfs-wither-on-tax-talk">Democrats and Republicans</a> warmed to the idea of taxing interest earned on these bonds.

That interest has not been taxed for over a century and just the mere speculation that one of the primary allures of investing in municipal bonds could go by the wayside <a href="http://www.benzinga.com/markets/bonds/12/12/3175808/muni-bond-etf-doing-dividend-damage">marquee ETFs tracking the asset class tumbling</a>.

Fortunately, <a href="http://www.etftrends.com/2013/01/muni-bond-etf-income-to-stay-tax-free-in-budget-compromise/?utm_source=iContact&amp;utm_medium=email&amp;utm_campaign=ETF%20Trends&amp;utm_content=">muni bond ETFs averted disaster</a> and may be able to generate upside to go along with the income component in 2013.

The Market Vectors High-Yield Muni ETF (NYSE: <a class="ticker" href="/stock/hyd#NYSE">HYD</a>), the largest ETF tracking high-yield munis, and the iShares S&amp;P National AMT-Free Municipal Bond ETF (NYSE: <a class="ticker" href="/stock/mub#NYSE">MUB</a>), the largest muni bond ETF of any kind, have reclaimed some of their pre-cliff resolution losses. New tax rates on wealthy Americans could make municipal bonds and the corresponding ETFs even more attractive this year.

"Personal income taxes for individuals with income over $400,000 and households over $450,000 will increase; as will taxes on dividends and capital gains for those investors," <a href="http://www.vaneck.com/Templates/Blog.aspx?id=2147490789&amp;blogid=2147483856">notes Market Vectors Portfolio Manager Jim Colby</a>.

Now that it is clear municipal bond interest will remain tax-free, some wealthy investors may be inclined to hunt for yield and income with the likes of HYD and MUB rather than pay the IRS an elevated tax from dividends earned on equities. 

Colby, who serves as portfolio manager for HYD and several other Market Vectors ETFs including the Market Vectors CEF Municipal Income ETF (NYSE: <a class="ticker" href="/stock/xmpt#NYSE">XMPT</a>) and the Market Vectors Long Municipal Index ETF (NYSE: <a class="ticker" href="/stock/mln#NYSE">MLN</a>), higher taxes for some Americans make munis all the more attractive.

"At this time, tax-free investors can exhale knowing that their tax-free income streams remain preserved as we roll off the second strong performance year in a row; the Barclays Municipal Bond Index returned 6.78% in 2012. With higher taxes coming for many Americans, I believe the tax-free coupon makes munis all the more desirable," he said.

For more on ETFs, click <a href="http://www.benzinga.com/etfs">here</a>.

Van Eck's Market Vectors unit, the fifth-largest U.S. ETF sponsor, announced that just five of its 50 ETFs will make long-term capital gains distributions to investors this year. 

Distributions are paid to investors from the capital gains of the firm's investment portfolio. For example, when a mutual fund manager turns a profit on a trade and closes the position, the fund's shareholders, not the sponsor, are saddled with the tax liability.
Most ETFs do not distribute capital gains to investors, which makes the asset class typically more tax efficient than mutual funds.

Four of the Market Vectors funds making long-term capital gains distributions will do so to the tune of less than a penny per share. Those funds are the Market Vectors CEF Municipal Income ETF (NYSE: <a class="ticker" href="/stock/xmpt#NYSE">XMPT</a>), the Market Vectors Intermediate Municipal Index ETF (NYSE: <a class="ticker" href="/stock/itm#NYSE">ITM</a>), the Market Vectors Short Municipal Index ETF (NYSE: <a class="ticker" href="/stock/smb#NYSE">SMB</a>) and the Market Vectors Mortgage REIT ETF (NYSE: <a class="ticker" href="/stock/mort#NYSE">MORT</a>). 

The Market Vectors LatAm Aggregate Bond ETF (NYSE: <a class="ticker" href="/stock/bono#NYSE">BONO</a>) will make a distribution of 2.8 cents per share, <a href="http://vaneck.com/Home.aspx">according to a statement on Van Eck's Web site</a>. The firm said the estimates were made on October 31 and are subject to change.

The Market Vectors Biotech ETF (NYSE: <a class="ticker" href="/stock/bbh#NYSE">BBH</a>) and the Market Vectors Oil Services ETF (NYSE: <a class="ticker" href="/stock/oih#NYSE">OIH</a>) will make short-term capital gains distribution this year.

Last week, BlackRock's iShares unit, the world's largest ETF sponsor, said said 275 of its 280 ETFs, or 98 percent of its lineup, <a href="http://www.benzinga.com/markets/bonds/12/11/3095644/most-ishares-etfs-wont-have-2012-capital-gains-distributions#ixzz2CggU2UGx">will not pay capital gains distributions to investors this year</a>.

For more on ETFs, click <a href="http://www.benzinga.com/etfs">here</a>.

As the debate about what an ETF's assets under management needs to be for the fund to be considered viable rages on, a few things are becoming clear. First, $100 million in AUM is the number most folks seem to focus on. Second, no empirical evidence exists to suggest an ETF's AUM total is a tell regarding the fund's ability to generate returns.

Third, evidence does exist that there are plenty of equity-based ETFs with less than <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/10/2994238/ignoring-sub-100m-etfs-a-costly-idea">$100 million in AUM that are delivering impressive returns</a>. Finally, it is also clear, and unfortunately so, that many investors ignore ETFs due to superficial factors such as size and volume.

This scenario is not exclusive to ETFs that hold stocks as there are some fine examples of bond funds with sub-$100 million AUM totals that are doing quite well this year. Here are some to consider. 

Arrow Dow Jones Global Yield ETF (NYSE: <a class="ticker" href="/stock/gyld#NYSE">GYLD</a>)
The Arrow Dow Jones Global Yield ETF debuted in May and has managed to attract almost $21.6 million in AUM thus far. GYLD is not a pure play on bonds as global equities do account for nearly 20 percent of the fund's weight. Non-bond investments such as alternatives and REITs also combine for about 40 percent of GYLD, but the fund does allocate the rest of its weight to global sovereign and corporate debt.

The bulk of the fund's sovereign debt is dollar-denominated, a trait that risk-averse investors may find appealing. GYLD has returned almost seven percent since its debut and sports a 30-day SEC yield of 6.11 percent. The fund is also one of the best ways to get exposure to Venezuela, the <a href="http://www.benzinga.com/analyst-ratings/analyst-color/12/10/2992411/finding-etf-ways-to-participate-in-venezuelas-upside">world's top-performing equity market this year</a>.

Market Vectors CEF Municipal Income ETF (NYSE: <a class="ticker" href="/stock/xmpt#NYSE">XMPT</a>)
Despite a rising number of municipal bankruptcies, municipal bond ETFs have posted stellar returns this year. Undoubtedly, investors have been drawn to the asset class due to <a href="http://www.benzinga.com/markets/bonds/12/06/2636236/muni-bond-etfs-continue-to-impress-hyd-mub-xmpt">decent yields and low default rates</a>. 

That also means investors have paying far more attention to ETFs such as the Market Vectors High-Yield Muni ETF (NYSE: <a class="ticker" href="/stock/hyd#NYSE">HYD</a>) and the iShares S&amp;P National AMT-Free Municipal Bond Fund (NYSE: <a class="ticker" href="/stock/mub#NYSE">MUB</a>). In the process, the Market Vectors CEF Municipal Income ETF has been all but ignored. Ignoring XMPT because it has just $13.1 million in AUM has not been a wise move. The fund pays a monthly dividend, has a 30-day SEC yield of 5.3 percent and is up 8.6 percent year-to-date.

iShares Baa - Ba Rated Corporate Bond Fund (BATS: QLTB)
Maybe it is because the iShares Baa - Ba Rated Corporate Bond Fund trades on an exchange that some traders and investors are not familiar with. Maybe it is because such much attention has been heaped on more familiar corporate bond fare such as the iShares iBoxx $ Investment Grade Corporate Bond Fund (NYSE: <a class="ticker" href="/stock/lqd#NYSE">LQD</a>) and the iShares iBoxx $ High Yield Corporate Bond Fund (NYSE: <a class="ticker" href="/stock/hyg#NYSE">HYG</a>).

Whatever the reasons are, QLTB has drawn in just $10.5 million in AUM since its late April debut. In QLTB's favor, it has performed almost inline with LQD since coming to market. The fund's holdings do not dwell too deep in junk status as only 0.5 percent of the holdings are rated B/B2 on the Standard &amp; Poor's scale. The 30-day SEC yield is 3.3 percent.

WisdomTree Emerging Markets Corporate Bond Fund (NASDAQ: <a class="ticker" href="/stock/emcb#NASDAQ">EMCB</a>)
If not for the PIMCO Total Return ETF (NYSE: <a class="ticker" href="/stock/bond#NYSE">BOND</a>), the WisdomTree Emerging Markets Corporate Bond Fund would likely be the most successful new bond to debut this year. It is not an apples-to-apples comparison, but EMCB is up almost eight percent in the past six months compared to a gain of nearly six percent for BOND.

It also appears EMCB's time below $100 million in AUM is limited because its asset growth has been nothing short of impressive. Just two months ago, the fund <a href="http://www.benzinga.com/markets/bonds/12/08/2856103/4-six-month-old-etfs-that-will-survive-and-thrive">had less than $63 million in AUM</a>. As of the close of markets Tuesday, that number had risen to almost $88.3 million, <a href="http://www.wisdomtree.com/etfs/fund-details-fixed-income.aspx?etfid=79">according to WisdomTree data</a>.

EMCB's 30 holdings are dollar-denominated and feature an effective duration of 6.26 years. The average yield to maturity is 4.37 percent.

For more on ETFs, click <a href="http://www.benzinga.com/etfs">here</a>.

BOND

EMCB

GYLD

Some Sub-$100M Bond ETFs Looking Good, Too

When it comes to ETFs and superlatives, few can surpass the PIMCO Total Return ETF (NYSE: <a class="ticker" href="/stock/bond#NYSE">BOND</a>). Not only is the fund frequently referred to as the Bill Gross ETF, perhaps the best marketing advantage in the history of ETFs, BOND is now the largest actively managed ETF.

It is impressive that BOND is the largest actively managed ETF, but what is more impressive is how quickly the fund the fund has amassed almost $2.1 billion in assets under management. BOND reached that lofty total in less than five full months of trading. 

That means BOND is by far the most successful new ETF of 2012 in terms of assets. To its credit, BOND deserves the ample praise it has received because the fund has returned 5.3 percent since inception. 

Yet for the warranted superlatives, BOND has not been the best-performing bond fund investors could have been involved with over the past 90 days. Believe it or not, there are multiple bond ETFs that have outpaced BOND in the past three months and some are worth more than just a passing glance.

PowerShares Emerging Markets Sovereign Debt ETF (NYSE: <a class="ticker" href="/stock/pcy#NYSE">PCY</a>)
In terms of AUM, BOND recently passed the PowerShares Emerging Markets Sovereign Debt Portfolio, but with $2.06 billion in AUM, PCY is still a big ETF. This monthly dividend payer <a href="http://www.benzinga.com/markets/bonds/12/05/2573295/more-monthly-dividend-etfs-emlc-pey-eld">has also been at the right place at the right time this year</a> as investors have embraced dollar-denominated emerging markets debt.

PCY's particulars stack up favorably against BOND's. The former charges 0.5 percent per year compared to 0.55 percent for the latter. The 30-day SEC yield on PCY is roughly 260 points higher than BOND's. More importantly, PCY has outperformed BOND by 110 basis points in the past 90 days. 

PCY's primary rival, the iShares J.P. Morgan USD Emerging Markets Bond Fund (NYSE: <a class="ticker" href="/stock/emb#NYSE">EMB</a>), has lagged BOND over that time.

Market Vectors CEF Municipal Income ETF (NYSE: <a class="ticker" href="/stock/xmpt#NYSE">XMPT</a>)
A recent jump in municipal bankruptcies might have some investors thinking twice about muni bond ETFs, but the numbers do not lie. The Market Vectors CEF Municipal Income ETF acts as a fund of funds because its index is composed of shares of municipal closed-end funds "that are principally engaged in asset management processes designed to produce federally tax exempt annual yield," according to Market Vectors.

XMPT is tiny with just $10.1 million in AUM, but the ETF features an expense ratio of 0.4 percent and a 30-day SEC yield of 5.43 percent, besting BOND on both accounts. In the past three months, XMPT has outpaced BOND by 45 basis points.

iShares iBoxx $ Investment Grade Corporate Bond Fund (NYSE: <a class="ticker" href="/stock/lqd#NYSE">LQD</a>)
BOND still has a long way to go to rival the iShares iBoxx $ Investment Grade Corporate Bond Fund, the largest ETF tracking corporate bonds, in terms of AUM. LQD's haul is almost $23.5 billion. The PIMCO offering is not heavy on corporates, so some might say this is not an apples-to-apples comparison.

Fair enough, but LQD is the type of ETF conservative income investors look to, as is BOND. However, LQD is far cheaper with fees of just 0.15 percent per year. In the past 90 days, BOND has narrowly outperformed LQD, but the tide has turned strongly in favor of LQD in the past month. In that time, iShares fund has generated almost double the returns offered by BOND.

WisdomTree Emerging Markets Local Debt Fund (NYSE: <a class="ticker" href="/stock/eld#NYSE">ELD</a>)
A lot of folks have said BOND is a "game-changer" among actively managed ETFs. Perhaps they did not get the memo about the WisdomTree Emerging Markets Local Debt Fund. Long before BOND came around, ELD became the first actively managed ETF to surpass $1 billion in AUM. Meaning that it was ELD that BOND wrested the title of "largest actively managed ETF" from.

ELD still has a few feathers in its cap. It has the same fees as BOND and the former's 30-day SEC yield is far higher than the latter's. A solid alternative for investors looking for non-dollar denominated assets, ELD is up 2.4 percent in the past month compared to 1.8 percent for BOND.

For more on income ETFs, click <a href="http://www.benzinga.com/markets/bonds/12/05/2573295/more-monthly-dividend-etfs-emlc-pey-eld">here</a>.

iShares JPMorgan USD Emerging Markets Bond Fund

PowerShares Emerging Markets Sovereign  Portfolio

Beating BOND: Some Bond Funds Trumping PIMCO Juggernaut

There is no doubt that the PIMCO Total Return ETF (NYSE: <a class="ticker" href="/stock/bond#NYSE">BOND</a>), also known as the Bill Gross ETF, has been the most successful new ETF to come to market in 2012. Following it's April debut, BOND, the ETF equivalent of the wildly popular PIMCO Total Return mutual fund, has risen more than four percent and has accumulated more than $1.72 billion in assets under management <a href="http://www.pimcoetfs.com/Funds/Pages/BOND.aspx?WT.svl=nav">according to PIMCO data</a>.

Barring a miracle, it is unlikely any other ETF that has debuted this year will come within spitting distance of BOND's AUM total.

Along the way, BOND has been on the receiving end of an almost alarming amount of praise. Some have deemed the ETF to be a "watershed moment" <a href="http://www.morningstar.com/topics/t/51892169/bill-gross-etf-seen-as-watershed-moment-for-active-etfs.htm">for actively managed funds</a>. The term "game-changer" as it pertains to BOND has been beaten like a dead horse. (Put the phrase "BOND ETF game-changer" into Google for supporting evidence.)

It can be argued that the real news is not that BOND has been so successful. No other ETF has the benefit of being known as the Bill Gross ETF and few ETF sponsors have the marketing resources <a href="http://blogs.barrons.com/incomeinvesting/2012/07/02/bond-claims-actively-managed-etf-asset-crown/?mod=BOL_hpp_blog_ii">that PIMCO has</a>.

It is only slight hyperbole to say those that have fallen in love with BOND are acting as if this ETF has solved the mystery of cold fusion, can change water into wine and commit other heroic acts that deem the fund worthy of an unending spate of effusive praise.

Arguably, BOND's success acts a distraction for investors. For example, it seems to be forgotten that the WisdomTree Emerging Markets Local Debt Fund (NYSE: <a class="ticker" href="/stock/eld#NYSE">ELD</a>) is an actively managed ETF. ELD, which charges 0.55 percent per year just as BOND does, is no shrinking violet among actively managed ETFs with almost $1.2 billion in AUM.

ELD has a cousin, the WisdomTree Asia Local Debt Fund (NYSE: <a class="ticker" href="/stock/ald#NYSE">ALD</a>). ALD, which debuted in March 2011, is also actively managed and charges the same fees as BOND and ELD. In terms of size, ALD is by no means small with $413 million in AUM, yet these successful products go almost unnoticed because praising BOND has become a full-time job for many.

There are even some bond funds that are outpacing BOND. As was noted earlier, since the PIMCO offering came to market in April, it has returned 4.1 percent. As of June 28, BOND had a 30-day SEC yield of 2.96 percent.

Those numbers pale in comparison to what the unheralded Market Vectors CEF Municipal Income ETF (NYSE: <a class="ticker" href="/stock/xmpt#NYSE">XMPT</a>) has offered. Since BOND's debut, the Market Vectors CEF Municipal Income ETF has jumped five percent. As of June 29, XMPT had a 30-day SEC yield of 5.52 percent. To be fair, XMPT's expense ratio is 98 basis points higher than BOND's, but that is buffered by better performance and a higher yield.

Staying with the theme of municipal bonds, an <a href="http://www.benzinga.com/markets/bonds/12/06/2636236/muni-bond-etfs-continue-to-impress-hyd-mub-xmpt">asset class that investors have embraced in a big way this year</a>, there are other funds that stack up favorably against BOND.

Consider the case of the Market Vectors High-Yield Municipal Index ETF (NYSE: <a class="ticker" href="/stock/hyd#NYSE">HYD</a>). To be fair, it should be noted that BOND has outpaced HYD by about 120 basis points since the former debuted. However, HYD is 20 basis points cheaper and its 30-day SEC yield is 210 basis points higher. Those are points in HYD's favor that cannot be glossed over just because Bill Gross has a new ETF on the market.

Then there is the case of the newly minted iShares Utilities Sector Bond Fund (NYSE: <a class="ticker" href="/stock/amps#NYSE">AMPS</a>). AMPS debuted in February and has been outperformed by BOND since the latter came to market. The iShares offering tracks primarily investment-grade corporate bonds issued by utilities. AMPS' 30-day SEC yield is slightly higher than BOND's and the sector fund has an expense ratio of 0.3 percent, 25 basis points lower than BOND's.

In the essence of clarity, this piece should not be construed as negative or an affront to anyone in particular. BOND has been a success. That is good for PIMCO and good for the fund's shareholders. That said, investors should not let all hullabaloo surrounding BOND distract them for the myriad of other worthwhile bond funds on the market.

For more on bond ETFs, click <a href="http://www.benzinga.com/markets/bonds/12/05/2633702/the-definitive-guide-to-junk-bond-etfs-hyg-jnk-sjnk">here</a>.

AMPS

Beyond BOND: Other Bond ETFs Merit Consideration

Muni Bond ETFs Continue to Impress (HYD, MUB, XMPT)

Despite being ensconced in controversy as states and cities struggle to get their fiscal houses in order, municipal bonds remain a favored asset class among income investors. Prized for their <a href="http://www.benzinga.com/markets/bonds/12/05/2595919/muni-bond-etfs-and-retirees-a-match-made-in-heaven">conservative posture, tax advantages and payouts that often arrive on a monthly basis, it's no wonder income investors and retirees adore muni bond ETFs</a>.

It's that conservative nature that is helping some muni bond ETFs look like market standouts in an environment where anything that smells of risk is being repudiated. The good news is there might be upside to be had among muni bond ETFs.

"Month-to-date and year-to-date performance of all muni high-yield bond sectors (with the exception of tobacco) has been positive." said Jim Colby, portfolio manager and senior municipal strategist at Market Vectors, one of the dominant sponsors of muni bond funds. Colby added: "The technicals of demand overpowering supply are still in place."

Remember, muni bonds have had to navigate some less-than-inspiring headlines over the past few years. There was the credit crisis of 2008 and the ensuing recession of 2009-2010. Last year, noted analyst Meredith Whitney was featured on "60 Minutes," warning of impending doom in the muni bond market. Then there municipal defaults in Alabama and Pennsylvania last year followed by one in Stockton, California this year. 

Those negative headwinds haven't stopped muni bond ETFs from being legitimate "shelter from the storm" plays. Including Friday's loss, the S&amp;P 500 is flirting with an 8% decline in the past month. On the other hand, the Market Vectors High-Yield Muni ETF (NYSE: <a class="ticker" href="/stock/hyd#NYSE">HYD</a>) and the iShares S&amp;P National AMT-Free Muni Bond ETF (NYSE: <a class="ticker" href="/stock/mub#NYSE">MUB</a>) are up 1.5% and 1.2%, respectively. 

What may come as a surprise to some investors is the states that are seeing the strongest inflows into flows. Of the <a href="http://www.vaneck.com/Templates/Blog.aspx?id=2147488853&amp;blogid=2147483856">top six, at least three, New York, California and Illinois, have less-than-desirable fiscal situations</a>. 

"Larger cities and states have weathered the slow recovery relatively well; at least well enough to convince investors that potential value resides in issuers rated BBB as compared to those rated AAA," Colby said.

California and New York municipal issues combine for over 29% of HYD's weight. In MUB, which has over $3 billion in assets under management, California and New York issues account for over 40% of that ETF's weight. 

Regarding the $621 million HYD, <a href="http://www.benzinga.com/markets/bonds/12/05/2633702/the-definitive-guide-to-junk-bond-etfs-hyg-jnk-sjnk">plenty of attention, most of it bad, is being paid to junk bonds these days</a>. So-called experts are crowing about liquidity concerns and issuer default, but as Colby noted in an interview with Benzinga earlier this month, "less than half of 1% of all rated bond issues default." Those are decent odds in favor of investors. 

Those that claim investors are running away from high-yield bonds should consider the following: When we examined HYD and other muni bond ETFs on May 16, HYD had $604.4 million in AUM. It started trading today with $621.4 million in AUM. Raking in $17 million in new assets isn't bad for two weeks of work.

Then there is the matter of yield. MUB's current yield is 3%, which is better than what an investor would get with the Dow or S&amp;P 500. The Market Vectors Long Municipal Index ETF (NYSE: <a class="ticker" href="/stock/mln#NYSE">MLN</a>) yields over 4% while HYD and the Market Vectors CEF Municipal Income ETF (NYSE: <a class="ticker" href="/stock/xmpt#NYSE">XMPT</a>) are both in the area of 5%. So it's not surprising that in a market that is rewarding conservative income plays that ETFs mentioned are all within spitting distance of new 52-week highs.

For more on bond ETFs, please click <a href="http://www.benzinga.com/markets/bonds/12/05/2633702/the-definitive-guide-to-junk-bond-etfs-hyg-jnk-sjnk">HERE</a>.

Muni Bond ETFs Continue to Impress (HYD, MUB, XMPT)

Van Eck Global's Market Vectors unit had a busy 2011 on the new ETF front and that level activity increased late in the year when the firm converted six old HOLDRs funds to Market Vectors ETFs. Quiet as it may be kept, Van Eck is currently the sixth-largest U.S. ETF issuer with almost $24.2 billion in assets under management as of the end of November.

In 2011, the firm continued rolling out new emerging markets funds, an area in which it has previously been quite successful. Beyond emerging markets ETFs, Market Vectors also found success with some new bond funds that provide income-starved investors with solid yields. 

We're leaving the recently converted HOLDRs off this list because that conversion took place just a matter of days ago, but don't worry, there are plenty of new Market Vectors ETFs to take a look at in this edition of "New Kids On The Block."

Market Vectors Colombia ETF (NYSE: <a class="ticker" href="/stock/colx#NYSE">COLX</a>)
Inception date: March 14
Year-to-date performance: -15%
Average daily volume: 380
Investor Appeal Grade: C-. Apparently, there's only room for one Colombia ETF right now and it's not COLX. The ETF has attracted just $1.6 million in assets under management and done little to threaten its more established rival, the Global X FTSE Colombia 20 ETF (NYSE: <a class="ticker" href="/stock/gxg#NYSE">GXG</a>). That said, if Latin American stocks pop in 2012, COLX could be a winner, at least in terms of attracting fresh investor inflows.

Market Vectors CEF Municipal Income ETF (NYSE: <a class="ticker" href="/stock/xmpt#NYSE">XMPT</a>)
Inception date: July 12
Year-to-date performance: 7%
Average daily volume: 3,000
Investor Appeal Grade: B. We recently noted that <a href="http://www.benzinga.com/markets/bonds/11/11/2156076/van-eck-proving-its-not-all-bad-for-muni-bond-etfs">2011 was far kinder to muni bonds than experts had predicted</a> and XMPT is one of the ETFs that benefited from that trend. It's AUM total ($4 million) is somewhat low and is expense ratio (1.43%) is high, but there is no getting around that fact that with a 30-day SEC yield of 5.92%, XMPT is a useful tool for conservative, income-minded investors.

Market Vectors Russia Small-Cap ETF (NYSE: <a class="ticker" href="/stock/rsxj#NYSE">RSXJ</a>)
Inception date: April 13
Year-to-date performance: -30%
Average daily volume: 3,450
Investor Appeal Grade: B-. That grade might appear generous given the awful performance of this ETF, but the reality is RSXJ is something different when it comes to Russia-specific ETFs. The ETF has been hurt by weakness in emerging markets and political issues specific to Mother Russia. In other words, the premise behind RSXJ was a good one, but the timing of introduction was not. One of the more interesting small-cap funds to watch in 2012.

Market Vectors LatAm Aggregate Bond ETF (NYSE: <a class="ticker" href="/stock/bono#NYSE">BONO</a>)
Inception date: May 11
Year-to-date performance: -6%
Average daily volume: 2,280
Investor Appeal Grade: B. BONO has a little something for everyone. The ETF holds sovereign and non-sovereign LatAm debt as well as issues denominated in local currency and some denominated in dollars and euros. With $7.2 million in AUM, BONO outperformed many an equity-based LatAm ETF this year, including the iShares MSCI Brazil Index Fund (NYSE: <a class="ticker" href="/stock/ewz#NYSE">EWZ</a>), by wide margins.

Market Vectors Mortgage REIT Income ETF (NYSE: MORT)
Inception date: August 16
Year-to-date performance: -6%
Average daily volume: 17,640
Investor Appeal Grade: A. Raking in $19.5 million in AUM since August is impressive in its own right, but that number is bound to grow as investors take a look at MORT's more important statistics. Those being a 30-day SEC yield of 14.48% and a distribution yield of 11.83%. For income investors, MORT may be one 2011's best new ETFs that no one told them about.

Small Cap Analysis

Reviews

COLX

RSXJ

New Kids On The Block: A Look At Some New Market Vectors ETFs

In what has been a controversial year for muni bond ETFs, some are standing above the rest and some of those standout funds can be found in Van Eck's Market Vectors ETF family. In a statement issued today, Van Eck noted that several of its muni bond ETFs have seen robust inflows from investors this year. 

Van Eck said the six Market Vectors ETFs offering muni bond exposure had $810 million in assets under management as of Nov. 11 and the Market Vectors Intermediate Muni ETF (NYSE: <a class="ticker" href="/stock/itm#NYSE">ITM</a>) recently crossed the $300 million in AUM level earlier this month. ITM was recently named “Best In Class” by Kiplinger's.

The Market Vectors Intermediate Muni ETF, Market Vectors Long Municipal Index ETF (NYSE: <a class="ticker" href="/stock/mln#NYSE">MLN</a>) and the Market Vectors Short Municipal Index ETF (NYSE: <a class="ticker" href="/stock/smb#NYSE">SMB</a>) also received four-star ratings from Mornings star at the end of October, Van Eck said in the statement.

“Over the past year, we've seen everything from unfulfilled predictions of massive defaults in the municipal market, to a shift in bond pricing that pushed absolute yields on many tax-exempt bonds well above those of comparable Treasuries,” Van Eck muni bond strategist James Colby said in the statement. “However, at the end of it all, many investors have generally benefited from having exposure to the asset class, both on an income-generating and total return basis.”

Van Ecks other muni bond ETFs are the Market Vectors High-Yield Muni ETF (NYSE: <a class="ticker" href="/stock/hyd#NYSE">HYD</a>), the Market Vectors Pre-Refunded Muni ETF (NYSE: <a class="ticker" href="/stock/prb#NYSE">PRB</a>) and the Market Vectors CEF Municipal Income ETF (NYSE: <a class="ticker" href="/stock/xmpt#NYSE">XMPT</a>).

Market Vectors Pre-Refunded Municipal Index ETF

Van Eck Proving It's Not All Bad For Muni Bond ETFs

Municipal bonds and the ETFs have sure garnered their fair share of negative publicity in 2011. Whether it has been skewering by Meredith Whitney, plenty of notoriety for the pathetic fiscal situations in states like California and Illinois or potential bankruptcies in scores of cities and towns throughout the U.S., what was once a benign asset class has turned controversial.

The U.S. muni bond market is massive, $3 trillion by some estimates, so an implosion in this market could be catastrophic. On the other hand, the specter of such an event and several municipal bankruptcies from coast to coast over the past several years have served to boost yields on munis and in an environment where yield is prized, some muni bond ETFs may just be worth a look. 

Here are a few your broker probably forgot to tell you about.

iShares S&amp;P National AMT-Free Municipal Bond Fund (NYSE: <a class="ticker" href="/stock/mub#NYSE">MUB</a>):
OK, MUB probably isn't one of the muni bond ETFs your broker forgot to mention and if he did, that's just weird. The iShares S&amp;P National AMT-Free Municipal Bond Fund is home to almost $2.3 billion in assets under management and nearly 1,500 issues. The bulk of MUB's holdings are investment-grade and roughly two-thirds have maturities of 1-5 or 5-10 years. For the risk taker in you, California bonds account for almost 23% of MUB's weight. Current yield: 3.43%.

Market Vectors High-Yield Municipal Index ETF (NYSE: <a class="ticker" href="/stock/hyd#NYSE">HYD</a>):
The Market Vectors High-Yield Municipal Index ETF is totally different animal than MUB. Not only is HYD subject to the alternative minimum tax, the ETF allocates about 75% of its weight to non-investment grade fare. In other words, this is the junk bond ETF of the muni world. That's not a black mark by any means as HYD is up almost 9% year-to-date. Current yield: 6%.

Market Vectors Short Municipal Index ETF (NYSE: <a class="ticker" href="/stock/smb#NYSE">SMB</a>):
The Market Vectors Short Municipal Index ETF is definitely an under the radar option in the muni bond ETF universe, but this fund should not be overlooked. In this case short does not mean inverse. It means most of SMB's holdings have maturities of 1-6 years. A move above $18 would extend this ETF's bullish ways. Current yield: 1.98%.

SPDR Nuveen Barclays Municipal Bond ETF (NYSE: <a class="ticker" href="/stock/tfi#NYSE">TFI</a>):
TFI is one for the conservative muni investor as 99% of the ETF's weight is allocated to bonds rated Aaa or Aa. The bulk of TFI's holdings range in maturity from five to 30 years. Expense ratio: 0.23%. Current yield: 3.3%.

Market Vectors CEF Municipal Income ETF (NYSE: <a class="ticker" href="/stock/xmpt#NYSE">XMPT</a>):
No, we don't have a bias for Market Vectors, but hey, the firm knows what it's doing when it comes to muni bond funds. XMPT is the newest muni bond ETF in the Market Vectors stable, having made its debut in July. Home to 78 holdings, XMPT is sort of a fund of funds because it holds a basket of closed-end muni bond funds designed to track federally tax exempt bonds. An expense ratio of 1.43% is high, but a 30-day SEC yield of 6.22% is inviting.

Technicals

Five Muni Bond ETFs Your Broker Forgot to Mention

ETF launch teams succumbed to the dog days of summer in July with new product introductions slowing to a trickle.  After a record setting first six months of the year, only seven new ETFs and five new ETNs achieved listing status during the month.  The six-month introduction rate dropped to 180, second only to the 190 for the six-month period ending in June.
Product closures started to pick up in July with the delisting of four ETFs and one ETN.  The dozen launches, coupled with the five closures, resulted in a net increase of just seven ETPs for the month.  July ended with a total of 1,295 listed products consisting of 1,123 ETFs and 172 ETNs.  The quantity of actively-managed ETFs held steady at 40.
Trading activity declined 11.9% for the month, which is inline with the 10% fewer trading days in July versus June.  The number of ETFs averaging more than $1 billion in daily trading activity (the Billion Dollar Club) increased from nine to ten accounting for nearly 62% of all ETP dollars traded.  SPDR S&amp;P 500 (<a class="ticker" href="/stock/spy#">SPY</a>) alone accounted for more than 34% of all ETP trading activity.
Products averaging more than $100 million of trading per day increased from 74 to 76 and accounted for more than 90% of all dollars traded.  Products averaging more than $10 million of trading per day increased from 226 to 234, grabbing 98% of all ETP dollars traded.  That left just 2% of the dollar volume for the remaining 1,066 products to fight over.
Assets under management were $1.11 trillion at the end of July, a slight increase of +0.8% for the month and a gain of +9.7% year-to-date. 

<table class="wptable rowstyle-alt" id="wptable-104" cellspacing="1" cellpadding="2">
<thead>
<tr>
<th class="sortable" style="width:250px" align="left">July 2011 Month End</th>
<th class="sortable" style="width:70px" align="center">ETFs</th>
<th class="sortable" style="width:70px" align="center">ETNs</th>
<th class="sortable" style="width:70px" align="center">Total</th>
</tr>
</thead>
<tr>
<td style="width:250px" align="left">Currently Listed U.S.</td>
<td style="width:70px" align="center">1,123</td>
<td style="width:70px" align="center">172</td>
<td style="width:70px" align="center">1,295</td>
</tr>
<tr class="alt">
<td style="width:250px" align="left">Listed as of 12/31/2010</td>
<td style="width:70px" align="center">967</td>
<td style="width:70px" align="center">132</td>
<td style="width:70px" align="center">1,099</td>
</tr>
<tr>
<td style="width:250px" align="left">New Introductions for Month</td>
<td style="width:70px" align="center">7</td>
<td style="width:70px" align="center">5</td>
<td style="width:70px" align="center">12</td>
</tr>
<tr class="alt">
<td style="width:250px" align="left">Delistings/Closures for Month</td>
<td style="width:70px" align="center">4</td>
<td style="width:70px" align="center">1</td>
<td style="width:70px" align="center">5</td>
</tr>
<tr>
<td style="width:250px" align="left">Net Change for Month</td>
<td style="width:70px" align="center">+3</td>
<td style="width:70px" align="center">+4</td>
<td style="width:70px" align="center">+7</td>
</tr>
<tr class="alt">
<td style="width:250px" align="left">New Introductions 6 mths</td>
<td style="width:70px" align="center">140</td>
<td style="width:70px" align="center">40</td>
<td style="width:70px" align="center">180</td>
</tr>
<tr>
<td style="width:250px" align="left">New Introductions YTD</td>
<td style="width:70px" align="center">160</td>
<td style="width:70px" align="center">42</td>
<td style="width:70px" align="center">202</td>
</tr>
<tr class="alt">
<td style="width:250px" align="left">Delistings/Closures YTD</td>
<td style="width:70px" align="center">4</td>
<td style="width:70px" align="center">2</td>
<td style="width:70px" align="center">6</td>
</tr>
<tr>
<td style="width:250px" align="left">Net Change YTD</td>
<td style="width:70px" align="center">+156</td>
<td style="width:70px" align="center">+40</td>
<td style="width:70px" align="center">+196</td>
</tr>
<tr class="alt">
<td style="width:250px" align="left">Actively-Managed (qty)</td>
<td style="width:70px" align="center">40</td>
<td style="width:70px" align="center">0</td>
<td style="width:70px" align="center">40</td>
</tr>
<tr>
<td style="width:250px" align="left">Assets Under Mgmt ($ billion)</td>
<td style="width:70px" align="center">$1,091</td>
<td style="width:70px" align="center">$16.0</td>
<td style="width:70px" align="center">$1,107</td>
</tr>
<tr class="alt">
<td style="width:250px" align="left">% Change in Assets</td>
<td style="width:70px" align="center">+0.7%</td>
<td style="width:70px" align="center">+1.9%</td>
<td style="width:70px" align="center">+0.8%</td>
</tr>
<tr>
<td style="width:250px" align="left">Monthly $ Volume ($ billion)</td>
<td style="width:70px" align="center">$1,445</td>
<td style="width:70px" align="center">$23.6</td>
<td style="width:70px" align="center">$1,468</td>
</tr>
<tr class="alt">
<td style="width:250px" align="left">% Change in Monthly $ Volume</td>
<td style="width:70px" align="center">-11.9%</td>
<td style="width:70px" align="center">-10.9%</td>
<td style="width:70px" align="center">-11.9%</td>
</tr>
<tr>
<td style="width:250px" align="left">Avg Daily $ Volume > $1 Billion</td>
<td style="width:70px" align="center">10</td>
<td style="width:70px" align="center">0</td>
<td style="width:70px" align="center">10</td>
</tr>
<tr class="alt">
<td style="width:250px" align="left">Avg Daily $ Volume > $100 Million</td>
<td style="width:70px" align="center">75</td>
<td style="width:70px" align="center">1</td>
<td style="width:70px" align="center">76</td>
</tr>
<tr>
<td style="width:250px" align="left">Avg Daily $ Volume > $10 Million</td>
<td style="width:70px" align="center">224</td>
<td style="width:70px" align="center">10</td>
<td style="width:70px" align="center">234</td>
</tr>
</table>

 Data sources:  AUM from National Stock Exchange, daily prices and volume of individual ETPs from Norgate Premium Data, fund counts and all other information compiled by Invest With An Edge.
New products launched in July (in chronological order), along with links to my initial analysis of each:
<ol>
<li>First Trust ISE Cloud Computing Index Fund (<a class="ticker" href="/stock/skyy#">SKYY</a>) [<a href="http://investwithanedge.com/skyy-the-wait-for-a-cloud-computing-etf-is-over" target="_blank">The Wait For A Cloud Computing ETF is Over</a>]</li>
<li>iPath Long Enhanced S&amp;P 500 VIX Mid-Term Futures ETN (<a class="ticker" href="/stock/vzzb#">VZZB</a>) [<a href="http://investwithanedge.com/vzz-terminates-and-vzzb-fills-the-void" target="_blank">VZZ Terminates and VZZB Fills the Void</a>]</li>
<li>iPath US Treasury 5-Year Bull ETN (DFVL) [<a href="http://investwithanedge.com/nine-new-etps-for-week-ending-71511" target="_blank">Nine New ETPs for Week Ending 7/15/11</a>]</li>
<li>iPath US Treasury 5-Year Bear ETN (DFVS)</li>
<li>IQ Emerging Markets Mid Cap ETF (EMER)</li>
<li>Market Vectors CEF Municipal Income ETF (<a class="ticker" href="/stock/xmpt#">XMPT</a>)</li>
<li>MAXIS Nikkei 225 Index Fund (<a class="ticker" href="/stock/nky#">NKY</a>)</li>
<li>ProShares Hedge Replication ETF (HDG)</li>
<li>Schwab US Aggregate Bond ETF (<a class="ticker" href="/stock/schz#">SCHZ</a>)</li>
<li>WisdomTree Global Real Return Fund (RRF)  [<a href="http://investwithanedge.com/nine-new-etps-for-week-ending-71511" target="_blank">Nine New ETPs for Week Ending 7/15/11</a>]</li>
<li>ETRACS Internet IPO ETN (<a class="ticker" href="/stock/eipo#">EIPO</a>) [<a href="http://investwithanedge.com/new-internet-ipo-etns-do-not-participate-in-ipos" target="_blank">New Internet IPO ETNs Do Not Participate in IPOs</a>]</li>
<li>ETRACS Monthly 2x Leveraged Internet IPO ETN (<a class="ticker" href="/stock/eipl#">EIPL</a>)</li>
</ol>
Product closures/delistings in July:
<ol>
<li>iPath Long Enhanced S&amp;P 500 VIX Mid-Term Futures ETN (<a class="ticker" href="/stock/vzz#">VZZ</a>)  [<a href="http://investwithanedge.com/vzz-terminates-and-vzzb-fills-the-void" target="_blank">VZZ Terminates and VZZB Fills the Void</a>]</li>
<li>FaithShares Baptist Values Fund (FZB) [<a href="http://investwithanedge.com/faithshares-to-charge-shareholders-for-july-closures" target="_blank">FaithShares To Charge Shareholders For July Closures</a>]</li>
<li>FaithShares Catholic Values Fund (FCV)</li>
<li>FaithShares Lutheran Values Fund (FKL)</li>
<li>FaithShares Methodist Values Fund (FMV)</li>
</ol>
Product changes in July:
<ol>
<li>AdvisorShares and Madrona changed the name of the three “Madrona Forward” ETFs by removing the word “Forward” effective 7/13/11. [<a href="http://investwithanedge.com/advisorshares-launches-four-new-actively-managed-etfs" target="_blank">AdvisorShares Launches New Actively Managed ETFs</a>].</li>
<li>FaithShares announced its last remaining fund, FaithShares Christian Values (<a class="ticker" href="/stock/foc#">FOC</a>), would close in September with the last day of trading set for 8/31/11.</li>
<li>FaithShares changed its name to Exchange Traded Concepts and the FaithShares Trust has changed its name to Exchange Traded Concepts Trust effective 7/15/11.  Additionally, the <a href="http://www.faithshares.com/files/Liquidation-Document.pdf" target="_blank">prospectus supplement of 7/15/11</a> (pdf) announced that Yorkville ETF Holdings acquired a majority interest in FaithShares Advisors on 6/24/11.</li>
<li>Guggenheim Shipping ETF (<a class="ticker" href="/stock/sea#">SEA</a>) changed its index to the Dow Jones Global Shipping Index effective July 27.</li>
<li>EGA Emerging Global Shares changed the names of five of its ETFs effective July 29.  The new names are EGShares Brazil Infrastructure ETF (<a class="ticker" href="/stock/brxx#">BRXX</a>), EGShares India Infrastructure ETF (<a class="ticker" href="/stock/inxx#">INXX</a>), EGShares China Infrastructure ETF (<a class="ticker" href="/stock/chxx#">CHXX</a>), EGShares India Small Cap ETF (<a class="ticker" href="/stock/scin#">SCIN</a>), and EGShares Emerging Markets Consumer ETF (<a class="ticker" href="/stock/econ#">ECON</a>).</li>
</ol>
Announced Product Changes for Coming Months:
<ol>
<li>FaithShares Christian Values Fund (<a class="ticker" href="/stock/foc#">FOC</a>) intends to close and liquidate after the last day of trading on 8/31/11.</li>
<li>PowerShares Active AlphaQ (<a class="ticker" href="/stock/pqy#">PQY</a>) and PowerShares Active Alpha Multi-Cap (<a class="ticker" href="/stock/pqz#">PQZ</a>) will close and liquidate after the last day of trading on 9/30/11.</li>
</ol>
Previous monthly ETF statistics reports are available <a href="http://investwithanedge.com/category/etf-statistics" target="_blank">here</a>.
Disclosure covering writer, editor, publisher, and affiliates:  Long XMPT.  No positions in any of the companies or ETF sponsors mentioned.  No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.
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Emerging Global Shares INDXX Brazil Infrastructure Index Fund

BRXX

Emerging Global Shares INDXX China Infrastructure Index Fund

CHXX

Emerging Global Shares Dow Jones Emerging Marketsnsumer Titan Index Fund

ECON

EIPL

EIPO

Emerging Global Shares INDXX India Infrastructure Index Fund

INXX

SCHZ

Emerging Global Shares INDXX India Small Cap Fund

SCIN

SKYY

VZZB

ETF Stats for July 2011: Launch Activity Slows

The parade of new exchange traded product launches continues unabated.  Last week, nine new products came to market consisting of six ETFs and three ETNs.  One of the new ETFs was from Precidian, a new sponsor in the ETF arena, and another is actively managed.
A brief overview of the new products and my analysis/opinion of each follows this list containing names, ticker symbols, and launch dates:
<ol>
<li>iPath Long Enhanced S&amp;P 500 VIX Mid-Term Futures ETN (<a class="ticker" href="/stock/vzzb#">VZZB</a>) 7/11/11</li>
<li>iPath US Treasury 5-Year Bull ETN (DFVL) 7/12/11</li>
<li>iPath US Treasury 5-Year Bear ETN (DFVS) 7/12/11</li>
<li>IQ Emerging Markets Mid Cap ETF (EMER) 7/13/11</li>
<li>Market Vectors CEF Municipal Income ETF (<a class="ticker" href="/stock/xmpt#">XMPT</a>) 7/13/11</li>
<li>MAXIS Nikkei 225 Index Fund (<a class="ticker" href="/stock/nky#">NKY</a>) 7/13/11</li>
<li>ProShares Hedge Replication ETF (HDG) 7/14/11</li>
<li>Schwab US Aggregate Bond ETF (SCHZ) 7/14/11</li>
<li>WisdomTree Global Real Return Fund (RRF) 7/14/11</li>
</ol>
 
iPath Long Enhanced S&amp;P 500 VIX Mid-Term Futures ETN II (<a class="ticker" href="/stock/vzzb#">VZZB</a>) provides an initial 200% exposure (without any leverage reset) to mid-term VIX futures.  <a href="http://investwithanedge.com/vzz-terminates-and-vzzb-fills-the-void" target="_blank">VZZB is a replacement for VZZ</a>, which triggered an early termination on July 1, 2011.
Opinion:  Given the possibility of early termination with “no-reset” leveraged products, I suspect traders formerly using VZZ may migrate to products with a longer shelf life versus switching to VZZB.
 
iPath US Treasury 5-Year Bull ETN (DFVL) and iPath US Treasury 5-Year Bear ETN (DFVS) will track the Barclays Capital 5 Year US Treasury Futures Targeted Exposure Index.  The index is designed to increase in response to a decrease in 5-year Treasury note yields and to decrease in response to an increase in 5-year Treasury note yields.  DFVL employs an index multiplier that provides a participation rate of $0.10 gain or loss per each 1.00 point increase or decrease, respectively, in the level of the index, while DFVS does the opposite.  The ETNs have annual investor fees of 0.75% (<a href="http://www.ipathetn.com/DFVL-overview.jsp" target="_blank">DFVL overview</a> and <a href="http://www.ipathetn.com/DFVS-overview.jsp" target="_blank">DFVS overview</a>). 
Opinion:  These products are 5-year versions of <a href="http://investwithanedge.com/barclays-launches-six-etns-for-custom-yield-curve-strategies" target="_blank">existing 2-year, 10-year, and long-term Treasury yield ETNs</a>.  They are potentially useful for investors wanting to construct customized yield curve exposure. 
 
IQ Emerging Markets Mid Cap ETF (EMER) seeks to provide the performance (minus the 0.75% expense ratio) of a float-adjusted market cap-weighted index of the mid-capitalization segment of stocks from emerging markets.  Largest country allocations go to Taiwan 22.8%, South Korea 13.0%, South Africa 11.7%, China 10.8%, and Brazil 9.4%.  Sectors with weightings above 10% are Consumer Discretionary 18.7%, Financials 18.1%, Industrials 15.9%, and Materials 13.3%.  The underlying index has 348 stocks, with none exceeding a 1% weighting (<a href="http://www.indexiq.com/etfs/international/iq-emerging-markets-mid-cap-etf.html" target="_blank">EMER overview</a>).
Opinion:  This is the first ETF to target emerging market mid-cap stocks, which tend to be more sensitive to internal country growth versus the export orientation of the large-cap firms.  I expect to be holding shares of EMER in the future. 
 
Market Vectors CEF Municipal Income ETF (<a class="ticker" href="/stock/xmpt#">XMPT</a>) seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the S-Network Municipal Bond Closed-End Fund Index, which is composed of shares of municipal closed-end funds listed in the United States.  The index assigns a greater weight to funds trading at a discount.  As a Fund- of- Funds (ETF of CEFs), XMPT will incur acquired fees of 1.03% but will cap its net expense ratio at 1.43%  (<a href="http://www.vaneck.com/funds/XMPT.aspx" target="_blank">XMPT overview</a>).
Opinion:  XMPT is the first ETF to offer municipal CEF exposure.  Based on figures of the underlying index, I estimate that XMPT will have a distribution yield of 5.2% with monthly distributions, a modified duration of 10.4 years, and leveraged exposure of 134%.  A similar product, the <a href="http://investwithanedge.com/pcef-closed-end-funds-inside-an-etf" target="_blank">PowerShares CEF Income Composite Portfolio</a> (<a class="ticker" href="/stock/pcef#">PCEF</a>), has a current distribution yield of 6.6% with an expense ratio of 1.62%.  However, it holds only taxable closed-end funds.  XMPT's focus on municipal income funds will produce a higher tax-equivalent yield for most investors.
 
MAXIS Nikkei 225 Index Fund (<a class="ticker" href="/stock/nky#">NKY</a>) (<a href="http://precidianfunds.com/2/nky225/" target="_blank">NKY overview</a>) seeks to provide investments results that correspond generally to the price and yield performance, before fees and expenses (0.50% expense ratio), of publicly traded securities in the Japanese market, as measured by the price-weighted Nikkei 225 Index.  The largest sectors within the Nikkei 225 include Industrials 24.9%, Technology 18.8%, Consumer Discretionary 18.7%, and Health Care 9.2%.
The sponsor and advisor, Percidian Funds, is a new entrant to the US ETF market.  However, the management team at <a href="http://www.precidianfunds.com/index.php/news/86-precidian-investments-name-change-press-release" target="_blank">Percidian, formerly Next Investments</a>, was involved in the development of SPDR Gold Shares (<a class="ticker" href="/stock/gld#">GLD</a>) and the CurrencyShares product line.  The “MAXIS” in the fund's name is a registered service mark of Mitsubishi UFJ Asset Management.
Opinion:  The <a href="http://investwithanedge.com/first-wave-of-etf-closures-for-2009" target="_blank">closure of Northern Trust's family of NETS ETFs</a> created a void of products focusing on the well-known home-grown indexes of foreign countries, and Percidian brought in Northern Trust as the sub-advisor to NKY.  The iShares MSCI Japan (<a class="ticker" href="/stock/ewj#">EWJ</a>) currently owns the Japan ETF space and has a 15-year head start on gathering assets.  NKY has a long way to go to catch up.
 
ProShares Hedge Replication ETF (HDG) (<a href="http://www.proshares.com/funds/hdg.html" target="_blank">HDG overview</a>) is the 122nd ETF from ProShares and seeks investment results, before fees and expenses (expense ratio 0.95%), that track the performance of the Merrill Lynch Factor Model — Exchange Series.  The index tries to match the risk and return characteristics of the hedge fund asset class by targeting a high correlation to HFRI Fund Weighted Composite Index (HFRI), an equally weighted composite of over 2,000 hedge funds.  Neither HDG nor the underlying index invests in hedge funds.  Instead, the index for the ETF attempts to mimic the characteristics of the HFRI using a systematic model to establish weighted long or short (sometimes long or flat) positions in six underlying factors on a monthly basis.  The six factors are the 1) S&amp;P 500 Total Return Index, 2) MSCI EAFE US Dollar Net Total Return Index, 3) MSCI Emerging Markets US Dollar Net Total Return Index, 4) Russell 2000 Total Return Index, 5) three-month U.S. Treasury bills, and 6) ProShares UltraShort Euro ETF.
Opinion:  <a href="http://investwithanedge.com/launch-of-mcro-etf" target="_blank">Index IQ blazed the trail for hedge fund replication products</a> in the ETF space in 2009 with the IQ Hedge Multi-Strategy Tracker ETF (<a class="ticker" href="/stock/qai#">QAI</a>) and IQ Hedge Macro Tracker ETF (<a class="ticker" href="/stock/mcro#">MCRO</a>).  The goal of equity-like returns with bond-like volatility is the “allure” of hedge funds, but that goal has escaped QAI and MCRO the past two years.  They have underperformed both stocks and bonds while having higher volatility than iShares Barclays Aggregate Bond (<a class="ticker" href="/stock/agg#">AGG</a>).  Even so, QAI has attracted nearly $135 million in assets, indicating investor demand and a potential payoff for the sponsor that eventually best delivers on the allure.
 
Schwab US Aggregate Bond ETF (SCHZ) (<a href="https://www.schwabetfs.com/summary.asp?symbol=SCHZ" target="_blank">SCHZ overview</a>) seeks investment results that track, as closely as possible, before fees and expenses, the total return of the Barclays Capital U.S. Aggregate Bond Index.  SCHZ becomes the fourteenth member of Schwab's broad-based ETF lineup.
Opinion:  SCHZ tracks the same index as the two category heavy weights – iShares Barclays Aggregate Bond (<a class="ticker" href="/stock/agg#">AGG</a>) with a 0.22% expense ratio and assets of nearly $12 billion, and Vanguard Total Bond ETF (<a class="ticker" href="/stock/bnd#">BND</a>) with a 0.11% expense ratio and assets of more than $10 billion.  Having the industry's lowest aggregate bond fund expense ratio at only 0.10%, <a href="http://investwithanedge.com/schwab-creates-watershed-event-with-commission-free-etfs" target="_blank">commission-free trading for clients of Schwab</a>, and a well-known underlying index, should guarantee success for SCHZ.
 
WisdomTree Global Real Return Fund (RRF) (<a href="http://www.wisdomtree.com/etfs/fund-details-alternative.asp?etfid=72" target="_blank">RRF overview</a>) seeks total returns of capital appreciation plus income that exceed the rate of inflation over long-term investment horizons.  RRF is actively managed using a structured investment approach that considers country and currency exposure, sector allocation, investment exposure and risk.  The fund incorporates both domestic and global inflation-linked debt securities as well as disciplined commodity strategies, thereby offering investors the potential for short- and long-term inflation protection, enhanced risk-adjusted performance, income, and diversification for traditional portfolios.  RFF will make quarterly dividend payments but expects the payment amounts to fluctuate.  Initial allocations include 67% Inflation Linked Bonds (22% US, 22% Developed Markets, and 22% Emerging Markets) and 33% Commodities (20% CTI Index, 10% CSCB Index, and 3% gold).
Opinion:  RRF appears to take a reasonable approach to providing a diversified inflation beating fund.  Its <a href="http://investwithanedge.com/two-inflation-hedge-etfs-launched-by-index-iq" target="_blank">primary competitor, IQ Real Return ETF</a> (<a class="ticker" href="/stock/cpi#">CPI</a>), is structured too conservatively to attract investor interest.
 
Disclosure covering writer, editor, and publisher:  Long GLD.  No positions in any of the companies or ETF sponsors mentioned.  No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.
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MCRO

PCEF

Nine New ETPs for Week Ending 7/15/11

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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VanEck CEF Muni Income ETF

Overview

VanEck CEF Muni Income ETF (BATS:XMPT), Quote.Headers.trade-ideas