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Municipal Bonds: 4Q’15 Outlook


What is your fourth quarter outlook for munis?


JAMES COLBY: My outlook is very healthy for the municipal marketplace. Why do I say that? Many of the factors that made munis attractive at the end of 2014 are still in place right now. They include certain aspects of the municipal market at large. I think the lower investment-grade and high-yield investments are still very attractively priced relative to the highest credit quality offerings in the municipal marketplace.


Also, one needs to compare munis to other asset classes. At Van Eck we've been looking at the relative value of municipals on a taxable-equivalent basis compared to other asset classes, and to us munis continue to stack up in providing superior income return to the investor. That has been the case for quite some time. I think the attractiveness of munis has been overshadowed by concerns about the economy and what the Federal Reserve is going to do.


Going into the fourth quarter, I believe it's very likely that we'll overcome some of these concerns and focus on positioning portfolios, and investing cash for the remaining three months of the year to generate income and performance for investors who have been otherwise occupied with other concerns in the economy and around the world.


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IMPORTANT DISCLOSURE


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 Van Eck Funds, Market 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.


Please note that Van Eck Securities Corporation offers investment products that invest in the asset class(es) included in this video. Municipal bonds are subject to risks related to litigation, legislation, political change, conditions in underlying sectors or in local business communities and economies, bankruptcy or other changes in the issuer’s financial condition, and/or the discontinuance of taxes supporting the project or assets or the inability to collect revenues for the project or from the assets. Additional risks include credit, interest rate, call, reinvestment, tax, market and lease obligation risk. Municipal bonds may be less liquid than taxable bonds. There is no guarantee that the Funds’ income will be exempt from federal or state income taxes, and changes in those tax rates or in alternative minimum tax rates or in the tax treatment of municipal bonds may make them less attractive as investments and cause them to lose value. Gains, if any, are subject to gains tax.


Investing involves substantial risk and high volatility, including possible loss of principal. An investor should carefully consider the investment objective, risks, charges and expenses of the Fund before investing. Bonds and bond funds will decrease in value as interest rates rise. To obtain a prospectus and summary prospectus, which contain this and other information, call 800.826.2333 or visit vaneck.com. Please read the prospectus and summary prospectus carefully before investing.


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