New ETF Invests in Closed-End Muni Bond Funds

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 |  About: Market Vectors CEF Municipal Income ETF (XMPT)
by: Tom Lydon

Investors can now access many closed-end municipal bond funds in a single wrapper with an exchange traded fund from Van Eck.

Market Vectors CEF Municipal Income ETF (NYSEArca: XMPT) is designed to appeal to investors hunting for income with many bonds offering thin yields.

ETFs tracking muni bonds have recovered after a default scare last year.

“Investors and their advisors have long been attracted to tax-exempt closed-end funds, which can offer attractive yields and, in some cases, sell at a discount to the underlying value of the portfolio assets,” said Jan van Eck , principal at Van Eck Global, in a press release. [State Deficit May Rattle Muni Bond ETFs.]

“XMPT’s index is well-diversified by credit, strategy and manager, focusing on higher quality assets and designed to take advantage of the closed-end fund’s tendency to trade at a discount. In the past, investors have long had to weigh these factors for themselves when investing in closed-end funds. Now, it is possible to build a diversified, highly liquid position in multiple closed-end funds by owning shares in a single ETF,” he added.

Tisha Guerrero contributed to this article.