Deutsche Bank filed regulatory paperwork to bring to market a U.S. long-term municipal bond fund. This is Deutsche Bank’s second filing within two weeks, after the bank filed to bring a utilities fund to market on Jan. 25.
This time, Deutsche Bank plans to market the db X-trackers Municipal Infrastructure Revenue Fund, which targets tax-exempt revenue and insured bonds issued by states, cities, counties, districts and other tax-exempt issuers. The ETF will track bonds issued to fund projects such as water and sewer systems, public power systems, toll roads, bridges, tunnels and many other public use projects.
The proposed fund will to tap into a somewhat untouched corner of the ETF market, joining just one other ETF that follows a long-term municipal bond index—Van Eck’s Market Vectors Long Municipal Index Fund (NYSEArca: MLN), which has $120 million in assets, according to data compiled by IndexUniverse.
Unlike MLN, which invests in federally tax-exempt muni bonds, the db X-tracker Municipal Infrastructure Revenue Fund will again focus its holdings on bonds issued with the intention of funding federal, state and local infrastructure projects. Income generated by bonds of this nature is wholly contingent on the municipal project they finance.
This passively invested fund will hold a representative sample of the DBIQ Municipal Infrastructure Revenue Index, with at least 80 percent of its holdings selected from that index, but not necessarily replicating its exact holdings.
Deutsche didn’t say what the fund would cost or what its ticker would be, but it did say that the fund would have its primary listing on Arca, the New York Stock Exchange’s electronic trading platform.
Our annual fixed-income conference is coming up in a little more than a week and I can’t wait.
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