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ITMS and ITML: Targeted Slices of the Muni IYield Curve


TOM BUTCHER: Jim, VanEck just launched two new intermediate municipal bond funds, tickers ITMS and ITML. What is the rationale behind these new ETFs?


JIM COLBY: Yes, we have launched two new municipal ETFs. ITMS (VanEck Vectors AMT-Free 6-8 Year Municipal Index ETF) is an ETF that will take a very narrow view of the municipal yield curve, from 6 to 8 years, which is the shorter maturity range carved out of the established ITM ETF (VanEck Vectors AMT-Free Intermediate Municipal Index ETF) that we have in the marketplace. With its focus on shorter maturity bonds, ITMS is going to be oriented for investors who are taking a slightly more conservative view of their interest rate risk in the municipal marketplace.


ITML (VanEck Vectors AMT-Free 12-17 Year Municipal Index ETF), also positioned as a subset of the broader ITM, is going to be associated with bonds from 12 to 17 years, which is the longer end of the bond maturity range for the broader ITM ETF. It is designed for those individuals who are willing to take a slightly more aggressive view of the marketplace and willing to take a little bit more interest rate risk with an intermediate position.


Why have we brought these two new municipal bond ETFs to market?


The municipal yield curve, particularly along the intermediate range, is changeable, depending on market conditions. We want to offer investors more focused opportunities that tactically facilitate total return potential ― given that it might occur in the short end of the market, or it might occur in the long end of the intermediate yield curve. These two new ETFs focuses on two specific slices of the muni yield curve, and represent tactical opportunities for investors to create more dynamic portfolios. Employing one or the other, or perhaps both, in some combination in investors’ portfolios, is the very thing that we had in mind.


BUTCHER: Thank you very much.


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The views and opinions expressed are those of the speaker and are current as of the video’s posting date. Video commentaries are general in nature and should not be construed as investment advice. Opinions are subject to change with market conditions. All performance information is historical and is not a guarantee of future results. For more information about VanEck Funds, VanEck Vectors ETFs or fund performance, visit vaneck.com. Any discussion of specific securities mentioned in the video commentaries is neither an offer to sell nor a solicitation to buy these securities. Fund holdings will vary. All indices mentioned are measures of common market sectors and performance. It is not possible to invest directly in an index. Information on holdings, performance and indices can be found at vaneck.com.


The Funds may be subject to risks which include, among others, risks related to municipal securities, credit, interest rate, call, California, New York, general obligation bond, transportation bond, special tax bond, sampling, tax, market, index tracking, authorized participant concentration, absence of prior active market, trading issues, replication management, fund shares trading, premium/discount, liquidity, non-diversified and concentration risks, all of which may adversely affect the Fund. Municipal bonds may be less liquid than taxable bonds. There is no guarantee that the Fund’s income will be exempt from federal, state or local income taxes, and changes in those tax rates or in Alternative Minimum Tax (AMT) rates or in the tax treatment of municipal bonds may make them less attractive as investments and cause them to lose value. Capital gains, if any, are subject to capital gains tax. The Fund’s assets may be concentrated in a particular sector and may be subject to more risk than investments in a diverse group of sectors.


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