Van Eck Plans Short-Term Junk Muni ETF
August 28, 2012
Van Eck Global, the New York-based money management firm behind the Market Vectors brand of ETFs, filed regulatory paperwork with the Securities and Exchange Commission on Aug. 27 to market a fund focused on short-dated, high-yield municipal bonds.
The Short High-Yield Municipal Index ETF will be based on the Short High Yield Index, which comprises publicly traded municipal bonds that cover the U.S. dollar-denominated high-yield short-term tax-exempt bond market, the regulatory filing said.
Because not all the munis in the index will be available for inclusion in the fund, Van Eck plans to employ a representative sampling strategy. That means the ETF won’t own all of the securities in the index.
Van Eck’s plan to market such an ETF appears to be an answer to a growing desire among investors to find a place to park cash equivalents. Interest rates are near zero and some are questioning money market funds, creating an opportunity for companies to serve up alternatives. The high-yield piece would add extra yield to such short-term holdings.
The filing didn’t specify a possible ticker or proposed annual expense ratio.
Our resident international expert Dennis Hudachek stops by to break down how this year's MSCI classification changes will impact your ETFs.See All