VanEck to shift to ICE Data Services indices for its ETFs

VanEck plans to switch the underlying indexes tracked by a number of the firm’s municipal bond exchange-traded funds from their current Bloomberg indexes to new indexes from ICE Data Services.

From March 1, 2022, until November 30, 2022, each fund will track a transition index, calculated by ICE, after which they will switch to the final indexes.

The shift to the final indexes is expected to expand each fund's investing universe. The fund names and tickers will stay the same when the transition period is over, and the ETFs will still be listed on the Cboe BZX Exchange.

The funds include VanEck Short Muni ETF (SMB), VanEck Intermediate Muni ETF (ITM), VanEck Long Muni ETF (MLN), VanEck Short High Yield Muni ETF (SHYD) and VanEck High Yield Muni ETF (HYD).

“Given the unique nature of the municipal bond market, we are taking a transitioned approach to the index changes. This is intended to enable the portfolio managers to make the necessary adjustments to portfolio holdings in a manner that minimizes the potential impact of the turnover to shareholders,” said Michael Cohick, director of product with VanEck.

He said the change will bring the pricing source used to calculate the funds’ net asset values and the source used to calculate their index returns closer together, “essentially providing a better and more transparent experience when investors compare the ETFs’ performance against the indexes they seek to track.”

“We’re excited to expand our relationship with VanEck as they transition this family of municipal bond ETFs to a robust set of broader indexes that align their preferred fund NAV pricing source with the source used to calculate the indexes,” said Mark Heckert, chief product officer of fixed income and data services at ICE.

VanEck introduced their first muni ETF in 2007 and expanded the fund family since then to provide investors with a range of exposures at all points along the yield curve.

The actively managed VanEck HIP Sustainable Muni ETF (SMI), the firm's most recent municipal bond ETF, debuted in September. Its goal is to provide investors with exposure to investment-grade municipal debt instruments that emphasize sustainability as well as beneficial social, environmental, and economic results or mission achievements, such as affordable housing, green spaces and hospitals.

“Investor interest in municipal bond exposures is reaching levels we have not seen for several decades, as investors pay ever closer attention to the income-generating portion of their portfolios," said Jim Colby, portfolio manager with VanEck. "To help investors meet their needs and goals, we are constantly evaluating our lineup to help ensure that we are providing the best possible approaches in the most efficient formats.”