Overview: VanEck Vectors Municipal Allocation ETF (MAAX)
We launched the VanEck Vectors Municipal Allocation ETF, the ticker is MAAX, because it solved a very specific problem for investors. We've long offered this suite of municipal allocation ETFs. Now, these ETFs have covered everything from credit to duration, or some combination in between. But we've never actually offered a vehicle that helps advisors to figure out: when do you want to be overweight credit? When do you want to be overweight duration? And when don't you want to be overweight credit or duration. This is our fourth offering within the suite of VanEck Guided Allocation Funds.
The idea for MAAX is really simple. In most environments, investors get well-compensated for taking duration risk as well as credit risk. However, there are certain periods when credit risk or duration risk, or both, flare up. It's during those periods where you need a process to identify them, those risks, and actually be able to get away from those risks. During those periods, we want to de-risk the portfolio by taking less credit risk, less duration risk, or both.
Indicators: Risk Managed Tactical Allocation
We use objective, data-driven indicators to figure out when is credit risk high, or when is duration risk higher, or when are both those risks high. When those risks are high, we step out of those markets. Or we significantly reduce them. What these indicators are doing, they're looking for price stability within bond prices, they're looking at credit spreads, they're looking at cross-asset correlations, they're looking at a whole plethora of risks to understand how much risk is in the credit markets and how much risk is in duration.
Outcome: Capturing the Upside
This fund is designed to help investors capture potential upside by being overweight credit and duration risks most of the time, and then tactically allocating out of those risks during these flare-ups.
We think that this is a great way to access the municipal market. Investors have long sought out the benefits of muni investments because they've got very low default risk historically and there's tax preferences on the yield. The added benefit is that we have downside protection embedded within the process.
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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. Certain statements contained herein may constitute projections, forecasts and other forward looking statements, which do not reflect actual results, are valid as of the date of this communication and subject to change without notice.
An investment in the Fund may be subject to risks which include, fund of funds risk, high portfolio turnover, model and data risks, management, operational, authorized participant concentration and absence of prior active market risks, trading issues, market, fund shares trading, premium/discount and liquidity of fund shares and non-diversified risks. The fund may be subject to following risks as a result of investing in Exchange Traded Products including municipal securities, credit, high yield securities, tax, interest rate, call, state concentration and sector concentration risks. Municipal bonds may be less liquid than taxable bonds. There is no guarantee that a Funds’ 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. A portion of the dividends you receive may be subject to AMT.
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