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Market Vectors High-Yield Municipal Index ETF (NYSE Arca: HYD), has surpassed $1 billion in assets under management (AUM), it was announced. HYD is the first high-yield municipal bond ETF, and just the fourth municipal bond ETF overall, to pass this threshold. This milestone puts the entire Market Vectors suite of six municipal income ETFs over $2 billion 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,” said 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 4 out of 5-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 of 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 (LMEHTR), which is calculated using a market value weighting methodology. The index tracks the high-yield municipal bond market with a 75 percent weight in non-investment grade municipal bonds and a 25 percent weight in Baa/BBB-rated investment grade municipal bonds for liquidity.
“In isolating the high-yield muni space with HYD, we’ve provided investors the kind of targeted exposure many are looking for when making allocations to different corners of the municipal market,” added Mr. Colby, who regularly blogs about the municipal bond market at
HYD is part of a suite of ETFs in the Market Vectors municipal income lineup, which was designed to cover the full risk/return spectrum. The other funds include
Market Vectors CEF Municipal Income ETF (NYSE Arca: XMPT),
Market Vectors Intermediate Municipal Index ETF (NYSE Arca: ITM),
Market Vectors Long Municipal Index ETF (NYSE Arca: MLN),
Market Vectors Pre-Refunded Municipal Index ETF (NYSE Arca: PRB), and
Market Vectors Short Municipal Index ETF (NYSE Arca: SMB). As of November HYD, ITM and SMB are each 4-star Morningstar funds on a three-year and overall basis, while MLN has received 5 stars on an overall and three year basis.
More information on HYD and the rest of the Market Vectors municipal bond ETF family can be
* Some portions of the distributions from HYD may be subject to the Alternative Minimum Tax (AMT).