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VanEck Bolsters Muni ETF Lineup With 2 Additions

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September 21, 2016 8:49 am
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VanEck, which is already a significant player when it comes to municipal bond exchange-traded funds, added to its municipal ETF lineup Tuesday with the addition of two funds.

The VanEck Vectors AMT-Free 12-17 Year Municipal Index ETF (BATS: ITML) and the VanEck Vectors AMT-Free 6-8 Year Municipal Index ETF (BATS: ITMS) can be seen as more refined relatives to the popular Market Vectors-Inter. Muni. Index (ETF) (NYSE: ITM). ITM debuted nearly nine years ago and has $1.6 billion in assets under management.

ITML

ITML follows the Bloomberg Barclays AMT-Free 12–17 Year Intermediate Continuous Municipal Index (BVELTR), “which is intended to track the overall performance of the U.S. dollar denominated intermediate term tax-exempt bond market with final maturities from 12–17 years,” according to VanEck.

Related Link: A Surprise Among Utilities ETFs

That new ETF, which holds 36 municipal bonds, has an effective duration of almost 7.4 years and a yield to worst of nearly 2.1 percent. Municipals issued by California, Texas and New York combine for about 52 percent of ITML's weight.

ITMS

The VanEck Vectors AMT-Free 6–8 Year Municipal Index ETF tracks the Bloomberg Barclays AMT-Free 6–8 Year Intermediate Continuous Municipal Index (BVE6TR), “which is intended to track the overall performance of the U.S. dollar denominated intermediate term tax-exempt bond market with final maturities from 6–8 years,” according to VanEck.

ITMS, which holds 25 bonds, has an effective duration of just over six years and a yield to worst of about 1.5 percent. Municipals issued by New York, California and Pennsylvania combine for 43 percent of the new ETF's lineup.

Municipal ETFs have been popular destinations this year, as investors have continued hunting for a yield, a search that has stoked interest in longer duration fare as the Federal Reserve has consistently put off raising interest rates.

Both new VanEck ETFs charge 0.24 percent per year, or $24 on a $10,000 investment.


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