Market Vectors® Intermediate Muni ETF

Tobacco bonds are one of the largest, most liquid, and highest-yielding segments in the municipal bond space (HYD) (ITM) (SMB).

2017 was a good year for both the stock market (SPY) as well as the debt market.

Compared to a corporate bond with a similar credit rating, muni bonds are less likely to default while offering modest yields.

In this series, we will shed light on Moody’s recent data report, US Municipal Bond Defaults and Recoveries, 1970–2016. Muni bond prices sparked in 2016, especially when President Trump announced his infrastructure spending plans.

With their high yields, low prices, and tax-efficient returns, muni bonds (HYD) (ITM) could be available to investors at a dirt cheap rate in the coming months.

The downfall for muni bonds (HYD) (ITM) (MLN) began in October 2016 after the muni market was flooded with new issues for state and local governments.

Puerto Rico is currently in a meltdown mode. Over the past decade, it has accumulated $70.0 billion in public debt, which is close to 68.0% of its GDP.

President-elect Donald Trump’s tax reforms could bring cheers from taxpayers, but the tax bracket changes may not be well received by muni bond investors.

After investors’ post-election U-turn, some tailwinds turned to headwinds for municipal bonds. Investors moved money out of bond funds amid expectations of a Fed rate hike.

Immediate-term bonds (ITM) are better placed since investors take less of an interest rate risk.

With a longer duration of the intermediate bonds rate curve, ITML is best suited for investors who are uncertain about the movement of interest rates in the near future.

As of September 30, 2016, ITMS has all of its investments in US dollar-denominated bonds with a credit rating of “A” or higher, thus ensuring lower risks.

In September 2016, VanEck introduced two new ETFs that provide exposure to intermediate-term municipal bonds.

BUTCHER: Thank you. Do you see any specific opportunities today? COLBY: I think there are two fairly distinct opportunities for investors to consider. One is based on interest rates and interest rate outlooks. The other is based on risk that investors might be willing to assume on a credit basis. From an interest rate perspective, […]