Skip directly to Accessibility Notice
VanEck logo

Income Investing: Ideas to Beat the BankSM

In an ever-changing interest rate environment, keeping tabs on the numerous corners of the yield market can be difficult for investors. To help investors stay informed, we offer monthly insights on income investing, covering the latest news, trends and investment opportunities.

BDC Recovery Boosts Income Potential – September 2020*
Authored by: Coulter Regal, CFA, Associate ETF Product Manage

Yields remained mostly unchanged in August and many categories continue to yield near or even below the levels where they stood one year ago. At the end of August, the market received big news from Federal Reserve Chairman Jerome Powell, who announced that the central bank would abandon its policy of pre-emptively raising rates to head off inflation. This breaks decades of tradition, and the adoption of an inflation-averaging strategy may result in interest rates staying low for longer. Despite this era of low rates, there are still pockets of the market that can offer investors attractive income potential.

One area of the market investors may want to consider is business development companies (BDCs). BDCs generate income by lending to, and investing in, private companies and provide exposure to the typically difficult to access private credit market. They offer high income potential and may be an attractive option for investors looking to boost yield and diversification in their portfolio. While this segment of the market was hit hard in March and April, recent earnings calls by BDCs offered valuable insight into the health and outlook of the middle-market space that may point to a continued recovery going forward. One important theme discussed was the increased demand for customized financing needs, particularly as traditional banks have been less aggressive in seeking to make new loans. This may provide opportunity for BDCs to capture better terms, pricing and documentation on new investments going forward. Also discussed was the topic of interest collection and nonperforming loan rates. The two largest BDCs, Ares Capital and Owl Rock Capital, experienced few non-accruals and collected 98% of interest due last quarter. This may indicate that investment income for much of the BDC market has, so far, not been materially impacted by the pandemic, which we believe should help alleviate concerns of deteriorating BDC distributions. While BDCs are still trading below pre-pandemic levels, these insights from quarterly earnings may suggest that they are recovering and could continue to produce attractive income for investors.

The VanEck Vectors® BDC Income ETF (BIZD) offers exposure to publicly traded U.S. BDCs. The Fund’s 30-day SEC yield was 12.31%, as of August 31, and with interest rates historically low and unlikely to rise in the foreseeable future, we view this strategy as an option for investors looking to boost income from their portfolio.

VanEck Vectors Income ETFs

Ticker Fund Name 30 Day SEC Yield (%)3 Duration (Yrs) Gross Expense Net Expense
Municipal Income
XMPT CEF Municipal Income ETF 4.10 -- 2.02 2.02
HYD High Yield Muni ETF 3.72 6.431 0.35 0.35
ITM Intermediate Muni ETF 0.86 5.821 0.24 0.24
MLN Long Muni ETF 1.79 6.601 0.24 0.24
MAAX Muni Allocation ETF 2.96 6.211 0.35 0.35
SHYD Short High Yield Muni ETF 2.65 4.281 0.35 0.35
SMB Short Muni ETF 0.34 3.021 0.20 0.20
Corporate Bond
ANGL Fallen Angel High Yield Bond ETF 4.34 6.482 0.43 0.35
FLTR Investment Grade Floating Rate ETF 0.72 0.072 0.40 0.14
Equity Income
BIZD BDC Income ETF 12.31 -- 10.31 10.24
EINC Energy Income ETF 7.34 -- 0.45 0.45
DURA Morningstar Durable Dividend ETF 3.84 -- 1.14 0.29
MORT Mortgage REIT Income ETF 12.90 -- 0.50 0.41
PFXF Preferred Securities ex Financials ETF 5.60 -- 0.44 0.41
International Bond
CBON ChinaAMC China Bond ETF 2.87 2.142 3.53 0.50
EMAG Emerging Markets Aggregate Bond ETF 3.23 5.592 1.49 0.35
HYEM Emerging Markets High Yield Bond ETF 5.94 3.592 0.47 0.40
GRNB Green Bond ETF 1.35 5.222 0.83 0.20
IHY International High Yield Bond ETF 4.66 3.612 0.62 0.40
EMLC J.P. Morgan EM Local Currency Bond ETF 4.21 5.222 0.36 0.30
← Scroll for more information →

Source: VanEck (as of 08/31/20).
1Duration to Worst. 2Effective Duration. 330-Day SEC Yield is calculated daily, and is a standard yield calculation developed by the Securities and Exchange Commission that allows for fairer comparisons primarily among bond funds. It is based on the most recent 30-day period. This yield figure reflects the interest earned during the period after deducting the Fund's expenses for the period. It does not reflect the yield an investor would have received if they had held the Fund over the last 12 months assuming the most recent NAV. In the absence of temporary expense waivers or reimbursements, the 30-Day SEC Yields on 08/31/20 would have been as follows - XMPT: 4.10%MAAX: 2.96%ANGL: 4.28%FLTR: 0.48%BIZD: 12.25%DURA: 3.20%MORT: 12.82%PFXF: 5.58%CBON: 1.90%EMAG: 2.47%HYEM: 5.90%GRNB: 0.83%IHY: 4.53%EMLC: 4.18%. Expenses for VanEck Vectors Equity and Income ETFs are contractually capped. Expense caps exclude acquired fund fees and expenses, interest expense, trading expenses, taxes and extraordinary expenses. Expense Caps: XMPT: 0.40%MAAX: 0.08%ANGL: 0.35%FLTR: 0.14%BIZD: 0.40%DURA: 0.29%MORT: 0.40%PFXF: 0.40%CBON: 0.50%EMAG: 0.35%HYEM: 0.40%GRNB: 0.20%IHY: 0.40%EMLC: 0.30%. Expenses for VanEck Vectors Municipal ETFs are unitary fees. Van Eck Associates Corporation (the “Adviser”) will pay all expenses of these Funds, except for the fee payment under the investment management agreement, acquired fund fees and expenses, interest expense, offering costs, trading expenses, taxes and extraordinary expenses. Expense ratios are as of the most recent prospectus. Past performance is no guarantee of future results. Please see the prospectus of each fund for more detailed information on expenses.

Morningstar ETF Category Flows

Estimated Net Flow ($M)
Morningstar Category Name 1-Mo QTD YTD 1-Yr
Short-Term Bond 3,670 6,723 17,810 21,849
High Yield Bond 2,440 9,051 22,270 29,524
Intermediate Government 657 183 3,547 10,907
Long-Term Bond 589 1,471 1,635 2,918
Emerging Markets Bond 569 1,439 771 1,204
Muni National Short 376 716 1,866 2,382
Muni National Long 348 718 1,238 1,527
Muni National Interm 280 1,469 4,803 7,604
Bank Loan 222 417 -2,364 -370
World Bond 136 274 -12 -258
High Yield Muni -11 101 -80 339
Short Government -121 -625 9,942 10,187
Long Government -1,750 -2,199 -920 165
Ultrashort Bond -1,790 -3,395 7,066 8,589
← Scroll for more information →
Source: Morningstar (as of 08/31/20). Not representative of fund or fund indices.

Investment Category Yields

Yield to Worst (%)
Category 08/31/20 07/31/20 08/31/19
EM USD High Yield Aggregate 7.32 7.84 8.36
Global High Yield Corporates 5.40 5.63 5.63
U.S. High Yield Corporates 5.36 5.46 5.81
EM USD Sovereigns 5.06 5.06 5.16
High Yield Municipals 4.53 4.53 3.96
EM Local Currency Sovereigns 4.45 4.35 5.26
EM USD High Yield + Investment Grade Corporates 4.04 4.26 4.71
U.S. Corporates 1.95 1.86 2.81
Municipals 1.30 1.20 1.65
U.S. Aggregate 1.15 1.05 2.13
Global Aggregate 0.90 0.82 1.18
Preferred Securities 0.78 1.06 1.37
10 Year Treasuries 0.70 0.54 1.50
Treasury Inflation Protected Securities 0.68 0.62 1.69
← Scroll for more information →
FactSet (as of dates indicated). See bottom of page for Index names. Not representative of fund or fund indices. Please see standard performance for these categories below. Past performance is no guarantee of future results.

U.S. Yield Curves

Treasury Yield Curve

Muncipal AAA Yield Curve

Source: Bloomberg (as of 08/31/20).

Global 10-Year Sovereign Yields (%)

Source: FactSet and Bloomberg (as of 08/31/20). Based on local currency prices. Past performance is no guarantee of future results.

Investment Category Total Returns (%)

Month-End 08/31/2020 Quarter-End 06/30/2020
Investment Category 1 MO* YTD* 1 YR 3 YR 5 YR
U.S. Aggregate -0.81 6.85 8.67 5.31 4.29
U.S. High Yield Corporates 0.98 0.75 -1.09 2.93 4.56
Global High Yield Corporates 1.55 1.95 -0.58 2.95 4.61
EM USD High Yield Aggregate 2.14 -0.84 -4.28 1.22 4.99
EM USD High Yield + Investment Grade Corporates 0.84 3.69 4.09 4.60 5.28
EM Local Currency Sovereigns -0.33 -4.39 -2.80 1.13 2.33
EM USD Sovereigns 0.51 1.37 0.49 3.59 5.28
U.S. Corporates -1.38 6.94 9.43 6.32 5.81
U.S. REITs -0.34 5.07 6.51 5.59 5.15
Global Aggregate -0.15 6.11 4.19 3.78 3.54
Treasury Inflation Protected Securities 1.09 9.63 8.21 5.03 3.73
Municipals -0.47 3.31 4.41 4.21 3.92
High Yield Municipals 0.26 0.27 1.01 5.26 5.75
10 Year Treasuries -1.33 12.48 14.10 7.03 4.85
Preferred Securities 1.18 3.24 2.70 3.84 5.62
U.S. Dividend Stocks 2.01 -17.84 -15.04 -0.44 5.41
← Scroll for more information →

VanEck Vectors Income ETF Total Returns (%)

Month-End 08/31/20 Quarter-End 06/30/20
Ticker Fund Name 1 MO* YTD* 1 YR 3 YR 5 YR LIFE Commenced
Municipal Income
HYD High Yield Muni ETF 0.16 -3.36 -3.32 2.70 3.82 6.65 02/04/09
ITM Intermediate Muni ETF -0.49 4.06 4.71 4.49 4.23 4.45 12/04/07
MAAX Muni Allocation ETF -0.30 -2.22 -1.63 -- -- -0.54 05/15/19
MLN Long Muni ETF -0.72 3.95 4.92 5.13 4.97 4.32 01/02/08
SHYD Short High Yield Muni ETF 0.30 -0.90 -0.69 2.78 2.28 2.53 01/13/14
SMB Short Muni ETF -0.05 2.74 3.14 2.40 1.92 2.37 02/22/08
XMPT CEF Municipal Income ETF -1.01 0.79 1.39 3.59 5.68 5.74 07/12/11
Corporate Bond
ANGL Fallen Angel High Yield Bond ETF 1.04 6.20 3.52 4.44 6.85 7.67 04/10/12
FLTR Investment Grade Floating Rate ETF 0.38 1.12 1.85 2.41 2.11 1.53 04/25/11
Equity Income
BIZD BDC Income ETF 4.74 -19.63 -19.14 -4.04 1.60 1.59 02/11/13
DURA Morningstar Durable Dividend ETF 3.87 -5.33 -4.71 -- -- 3.86 10/30/18
EINC Energy Income ETF 3.34 -26.75 -30.90 -11.78 -16.85 -14.24 03/12/12
MORT Mortgage REIT Income ETF 2.08 -35.69 -36.08 -11.33 -1.28 2.60 08/16/11
PFXF Preferred Securities ex Financials ETF 1.86 -0.21 -2.94 2.25 3.79 4.55 07/16/12
International Bond
CBON ChinaAMC China Bond ETF 1.84 3.90 1.41 2.74 0.85 0.97 11/10/14
EMAG Emerging Markets Aggregate Bond ETF 0.35 0.23 0.51 2.80 3.57 2.50 05/11/11
EMLC J.P. Morgan EM Local Currency Bond ETF -0.28 -3.91 -5.51 -0.70 0.96 0.40 07/22/10
GRNB Green Bond ETF -0.45 6.57 4.76 3.37 -- 4.76 03/03/17
HYEM Emerging Markets High Yield Bond ETF 1.84 1.70 0.14 2.76 4.60 4.83 05/08/12
IHY International High Yield Bond ETF 1.81 3.06 0.17 2.78 4.24 4.62 04/02/12
← Scroll for more information →

Month-End 08/31/20 Quarter-End 06/30/20
Ticker Fund Name 1 MO* YTD* 1 YR 3 YR 5 YR LIFE Commenced
Municipal Income
HYD High Yield Muni ETF -0.23 -3.38 -3.08 2.91 4.27 6.68 02/04/09
ITM Intermediate Muni ETF -0.60 3.99 4.78 4.49 4.23 4.45 12/04/07
MAAX Muni Allocation ETF -0.01 -2.27 -1.47 -- -- -0.47 05/15/19
MLN Long Muni ETF 0.22 3.82 4.76 5.15 5.07 4.30 01/02/08
SHYD Short High Yield Muni ETF 0.33 -1.19 -1.72 2.57 2.16 2.38 01/13/14
SMB Short Muni ETF 0.14 2.76 3.38 2.53 2.08 2.38 02/22/08
XMPT CEF Municipal Income ETF -0.95 0.69 1.51 3.72 5.75 5.78 07/12/11
Corporate Bond
ANGL Fallen Angel High Yield Bond ETF -0.12 5.71 3.24 4.46 6.83 7.69 04/10/12
FLTR Investment Grade Floating Rate ETF 0.58 1.19 1.93 2.32 2.15 1.53 04/25/11
Equity Income
BIZD BDC Income ETF 4.54 -19.91 -18.67 -3.89 1.63 1.67 02/11/13
DURA Morningstar Durable Dividend ETF 4.12 -5.21 -4.66 -- -- 3.92 10/30/18
EINC Energy Income ETF 4.16 -26.34 -30.46 -11.58 -16.74 -14.20 03/12/12
MORT Mortgage REIT Income ETF 2.10 -35.72 -35.83 -11.17 -1.27 2.61 08/16/11
PFXF Preferred Securities ex Financials ETF 2.08 -0.12 -2.72 2.34 3.76 4.61 07/16/12
International Bond
CBON ChinaAMC China Bond ETF 1.75 5.11 2.11 3.35 0.94 1.11 11/10/14
EMAG Emerging Markets Aggregate Bond ETF -0.01 -0.41 -0.41 2.71 3.66 2.44 05/11/11
EMLC J.P. Morgan EM Local Currency Bond ETF 0.24 -3.86 -5.98 -0.89 0.93 0.35 07/22/10
GRNB Green Bond ETF -0.35 6.74 4.98 3.34 -- 4.85 03/03/17
HYEM Emerging Markets High Yield Bond ETF 1.49 1.80 -0.66 2.81 4.72 4.83 05/08/12
IHY International High Yield Bond ETF 2.43 3.07 0.30 2.85 4.20 4.65 04/02/12
← Scroll for more information →