Exchange traded fund providers have kicked off the New Year by
rolling out a batch of new funds onto the
Van Eck Global introducedMarket Vectors Short High-Yield
Municipal Index ETF (
) Tuesday. It holds 43 noninvestment grade, tax-free municipal
bonds maturing in one to 10 years.
During a time of rising interest rates, it delivers a yield
greater than investment-grade bonds but with half the
interest-rate risk, said Jim Colby, senior municipal strategist
at Van Eck Global.
The longer a bond has until maturity the more sensitive its
price is to interest rate changes. Because bond prices and yields
move opposite each other,
risk losing principal when interest rates and yields rise.
High-yield municipal bond issuers have a default rate of about
6% over the past two decades, while corporate high-yield issuers
have default rates twice that, Colby said.
SHYD carries an annual expense ratio of 0.38%.
EGA And TCW Team Up
Emerging Global Advisors and TCW Group have joined forces in
releasing Jan. 8 three emerging market, fixed-income ETFs that
each carry a 0.65% annual expense ratio.
1.EGShares TCW EM Short Term Investment Grade Bond (
) holds a mix of dollar-denominated corporate and government
bonds from Europe, Latin America, Asia and the Middle East that
mature in one to three years. The bonds have an average coupon of
SEMF has 18.1% of its assets in Brazil, 17.8% in Russia and
14.2% in Mexico.
2.EGShares TCW EM Intermediate Term Investment Grade Bond (
) holds an equal mix of corporate and sovereign bonds that mature
in four to seven years. They have an average coupon of 6.2%.
IEMF has 20% of its assets in Russia, 19.8% in Brazil and
11.1% in Mexico.
3.EGShares TCW EM Long Term Investment Grade Bond (
) weights corporate bonds at 44% and government bonds 56%. The
average coupon is 5%. It has 18.4% of assets in Brazil, 13% in
Russia and 11.5% in Mexico.
Actively Managed SPDRs
State Street Global Advisors launched three actively managed
ETFs Jan. 9. Each carries a 0.60% annual expense ratio.
1.SPDR MFS Systematic Core Equity ETF (
) holds 42 blue chip companies with an average five-year earnings
growth rate of 16%, a price-earnings ratio of 13 and
price-to-book ratio of 2.6.
MFS seeks to beat the S&P 500 index by applying a
bottom-up process that uses both fundamental and qualitative
research. MFS evaluates stocks based on valuation, price,
earnings momentum and earnings quality, the prospectus
On a macro level MFS says it examines companies' potential "in
light of their financial condition, market, economic, political
and regulatory conditions."
Top holdings:Exxon Mobil (XOM),JPMorgan Chase (JPM),Verizon
(VZ),IBM (IBM) andOracle (ORCL).
2.SPDR MFS Systematic Growth Equity (SYG) contains 49 stocks
with an average five-year earnings growth rate of 20%, P-E ratio
of 15, price-to-book ratio of 4.3 and an average market cap of
It's similar to SYE except it focuses on companies that fund
managers believe "have above-average earnings growth potential
compared to other companies."
Top holdings: Oracle,Facebook (FB),Comcast (CMCSA),Lockheed
Martin (LMT) and IBM.
3.SPDR MFS Systematic Value Equity (SYV) is a basket of 50
large-cap companies with an average five-year earnings growth
rate of 18%, P-E ratio of 12 and price-to-book of 1.8. It uses
the same stock picking criteria as SYE and SYG, while focusing on
companies that the fund managers believe are "undervalued
compared to their perceived worth."
Top names: Exxon Mobil, JPMorgan Chase,Citigroup (C),Chevron
(CVX) andNorthrop Grumman (NOC).