Van Eck has filed paperwork with the SEC for a “Market Vectors-Altman Defaulted & Distressed Bond ETF.” The Market Vectors-Altman Defaulted & Distressed Bond ETF (the “Fund”) seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the Market Vectors-Altman Defaulted & Distressed Bond Index. They did not specify a trading symbol or expense ratio in the initial filing.
Principal Investment Strategies
The Fund normally invests at least 80% of its total assets in securities that comprise the Fund’s benchmark index. The Index is comprised of defaulted bonds and distressed bonds that trade at no less than a 10% spread (yield to worst) over a comparable Treasury security. [Yield to worst measures the lowest potential yield that can be received on a bond based on the terms of the bond indenture. Defaulted bonds are bonds that are issued by companies that have failed to make timely payment of interest or principal or to otherwise comply with the provisions of the bond indenture. Distressed bonds are bonds that, in the judgment of Market Vectors Index Solutions GmbH (the “Index Provider”), are issued by companies that are, or might be, involved in reorganizations or financial restructurings, either out of court or in bankruptcy.] Qualifying securities must have a below investment grade rating (based on an average of Moody’s Investors Service, Inc. (“Moody’s”), Standard & Poor’s Rating Services (“S&P”) and Fitch International Rating Agency (“Fitch”)). The Index includes bonds issued by both U.S. and non-U.S. issuers. As of the date of this Prospectus, the Index included [ ] below investment grade bonds of [ ] issuers from the following countries: Canada, the United Kingdom and the United States, and approximately [ ]% of the Index is comprised of Rule 144A securities and [ ]% of Regulation S securities. The Fund’s 80% investment policy is non-fundamental and requires 60 days’ prior written notice to shareholders before it can be changed.
The Fund, using a “passive” or indexing investment approach, attempts to approximate the investment performance of the Index. The Adviser expects that, over time, the correlation between the Fund’s performance before fees and expenses and that of the Index will be 95% or better. A figure of 100% would indicate perfect correlation. Because of the practical difficulties and expense of purchasing all of the securities in the Index, the Fund does not purchase all of the securities in the Index. Instead, the Adviser utilizes a “sampling” methodology in seeking to achieve the Fund’s objective. As such, the Fund may purchase a subset of the bonds in the Index in an effort to hold a portfolio of bonds with generally the same risk and return characteristics of the Index.
The Fund may concentrate its investments in a particular industry or group of industries to the extent that the Index concentrates in an industry or group of industries. As of the date of this Prospectus, the Index is concentrated in the industrials sector and the financial services sector represented a significant portion of the Index.
For the full prospectus click: HERE