The Van Eck Global lineup of municipal bond exchange-traded funds (ETFs), continues to attract assets and accolades. The three Market Vectors national muni funds – Intermediate Municipal Index ETF (NYSE Arca: ITM), which seeks to track an index comprised of intermediate term tax-exempt bonds, Long Municipal Index ETF (MLN), which seeks to track an index comprised of long term tax-exempt bonds and Short Municipal Index ETF (SMB), which seeks to track an index comprised of short term tax-exempt bonds – have all received four-star overall ratings from Morningstar as of October 31, 2011, while ITM was recently named “Best in Class” by Kiplinger’s Personal Finance magazine. Collectively, the six-fund family of municipal income ETFs, which also include High Yield Municipal Index ETF (HYD), which seeks to track an index composed of higher-yield, lower-rated municipal bonds, Pre-Refunded Municipal Index ETF (PRB), which seeks to track an index composed of municipal bonds that have been refinanced by their issuer and escrowed and secured by U.S. treasuries and CEF Municipal Income ETF (XMPT), which seeks to track an index composed of municipal bond closed-end funds had approximately $810 million in assets, with ITM recently crossing the $300 million mark (both as of November 11, 2011). “At the time we introduced these municipal ETFs to the market, there was some question as to how investors would react to investing in tax-exempt bonds through an exchange-traded fund,” said Jan van Eck, Principal at Van Eck Global. “Now, four years later, we are starting to see an acceleration of assets moving into these funds.” As with other ETFs, municipal bond ETFs generally offer investors higher levels of liquidity and transparency, as well as lower costs, when compared to traditional open-end mutual fund products. The suite of Market Vectors municipal bond ETFs allow investors to access a range of risk/reward opportunities based on the duration and credit quality of the underlying bonds included in each ETF.
“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 the absolute yields on many tax-exempt bonds well above those of comparable treasuries,” said James Colby, municipal bond strategist at Van Eck. “However, at the end of it all, many investors have generally benefited by having exposure to the asset class, both on an income-generating and a total return basis.”Van Eck Global noted that based on Morningstar data, the expense ratios for its five municipal bond ETFs, excluding XMPT due to acquired fund fees and expenses of the underlying CEFs, are currently below the average for their Morningstar categories.* Additionally, the 30-day SEC yields and total returns for this suite of funds have been competitive versus other ETFs and mutual funds with similar investment objectives. Please visit www.vaneck.com to see the most recent yields and performance. *Source: Morningstar as of 10/31/2011. Based on the average expense ratio of ETFs in the following categories: muni short 0.26% (9 funds), muni national intermediate 0.30% (7 funds), muni national long 0.26% (4 funds), muni high yield 0.74% (3 funds) and MLN, ITM, SMB, HYD and PRB expense ratios of 0.24%, 0.24%, 0.20%, 0.35% and 0.24% respectively. ©2011 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. For each fund with at least a three-year history, Morningstar calculates a Morningstar Rating™ based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund’s monthly performance (including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and the bottom 10% receive 1 star. The Overall Morningstar Rating for a fund is derived from a weighted average of the performance figures associated with its three-, five- and 10-year (if applicable) Morningstar Rating metrics. Of U.S. domiciled ETFs, the overall and 3-year rating for: SMB was 4 stars out of 3 funds in the muni short category; ITM was 4 stars out of 1fund in the muni national intermediate category; MLN was 4 stars out of 4 funds in the muni national long category. Past performance is no guarantee of future results.
Market Vectors Municipal Bond ETF Risks:Municipal bonds are subject to risks related to litigation, legislation, political change, conditions in underlying sectors or in local business communities and economies, bankruptcy or other changes in the issuer’s financial condition, and/or the discontinuance of taxes supporting the project or assets or the inability to collect revenues for the project or from the assets. Additional risks include credit, interest rate, call, reinvestment, tax, market and lease obligation risk. High-yield municipal bonds are subject to greater risk of loss of income and principal than higher-rated securities, and are likely to be more sensitive to adverse economic changes or individual municipal developments than those of higher-rated securities. Interest and principal payments for pre-refunded bonds are funded from securities in an escrow account. The escrowed securities do not guarantee the price of these bonds. Municipal bonds may be less liquid than taxable bonds. There is no guarantee that the Funds’ income will be exempt from federal or state income taxes, and changes in those tax rates or in alternative minimum tax rates or in the tax treatment of municipal bonds may make them less attractive as investments and cause them to lose value. Capital gains, if any, are subject to capital gains tax. Some portions of the distributions from HYD and XMPT may be subject to the Alternative Minimum Tax (AMT). Market Vectors CEF Municipal Income ETF Risk: The Fund, 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’ investments, and the Fund’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 (“NAV”). 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’s long-term returns on such securities (and, indirectly, the long-term returns of the Shares) will be diminished. Investment in the Underlying Funds may be subject to municipal securities risk, high-yield securities risk, fixed-income securities risk, tax risk, liquidity risk, leverage risk and anti-takeover measures risk. Some of the Underlying Funds are considered non-diversified and can invest a larger proportion of its assets in a single company. As a result, they may be subject to greater risks than a diversified fund. A portion of the Fund’s dividends may be subject to federal, state, or local income taxes or may be subject to the federal alternative minimum tax.
Fund shares are not individually redeemable and will be issued and redeemed at their NAV only through certain authorized broker-dealers in large, specified blocks of shares called “creation units” and otherwise can be bought and sold only through exchange trading. Creation units are issued and redeemed principally in kind. Shares may trade at a premium or discount to their NAV in the secondary market.Investing involves substantial risk and high volatility, including possible loss of principal. Bonds and bond funds will decrease in value as interest rates rise. 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 888.MKT.VCTR or visit vaneck.com/etf. Please read the prospectus and summary prospectus carefully before investing. About Van Eck Global Founded in 1955, Van Eck Associates Corporation was among the first U.S. money managers helping investors achieve greater diversification through global investing. Today the firm continues this 50+ year tradition by offering global investment choices in hard assets, emerging markets, precious metals including gold, and other specialized asset classes. Market Vectors exchange-traded products have been offered by Van Eck Global since 2006 when the firm launched the nation’s first gold mining ETF. Today, Market Vectors ETFs and ETNs span several asset classes, including equities, municipal bonds and currency markets. Van Eck Global also offers mutual funds, variable insurance products, separate accounts and alternative investments. Designed for investors seeking innovative choices for portfolio diversification, Van Eck Global’s investment products are often categorized in asset classes having returns with low correlations to those of more traditional U.S. equity and fixed income investments. Van Eck Securities Corporation, Distributor, 335 Madison Avenue, New York, NY 10017