[This article appears in our July 2019 issue of ETF Report.]
VanEck Vectors Municipal Allocation ETF (MAAX)
New fund is an ETF-of-ETFs targeting municipal bonds
In May, VanEck launched an ETF-of-ETFs that targets the municipal bond space and mainly holds ETFs that are also issued by VanEck. The VanEck Vectors Municipal Allocation ETF (MAAX) is actively managed based on a quantitative model that uses momentum along with macroeconomic indicators to manage duration and credit risk.
The fund comes with an expense ratio of 0.36%.
MAAX will generally invest in five of VanEck’s other muni ETFs, but the prospectus notes the fund can also invest in ETFs and closed-end funds from other issuers.
The fund aims to maximize its long-term after-tax return, and sets about doing so using its municipal allocation model, which includes a trend-following element, and that’s designed to identify periods of heightened credit and duration risk.
The model is updated monthly and relies on inputs based on technical and macroeconomic indicators such as market prices and trends, volatility, yield spreads and relative yield ratios, according to the fund documents.
The quantitative model underlying MAAX’s management takes a “risk on” approach when duration risk is high and a “risk off” approach when duration risk is low. MAAX’s allocations will shift among the VanEck muni ETFs based on different scenarios.
Source: ETF.com. Data and information as of 5/31/2019.
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