SMI expands on VanEck’s sustainability-focused fund line-up, providing investors the opportunity to pursue tax-exempt income with impact (ESG, SDGs, and Climate Action)
VanEck today announced the launch of the VanEck HIP Sustainable Muni ETF (CBOE: SMI), the first ETF designed to offer exposure to investment-grade municipal debt securities that focus on sustainability as well as positive social, environmental and economic outcomes or mission accomplishment.
"We’re seeing investor interest in municipal bonds hitting levels not seen since the early 1990s, along with a concurrent increase in focus around sustainable investing approaches, especially in the fixed income marketplace,” said Jim Colby, Portfolio Manager with VanEck. “SMI offers investors a core portfolio tool that hones in on those municipal debt securities that are facilitating projects with sustainable and positive impact. We’re excited to be launching this unique sustainability-focused muni ETF using HIP Investor’s data and ratings, and to be providing a new strategy for those looking for impactful exposure in the tax-exempt fixed-income sleeve of their portfolios.”
SMI combines VanEck’s leadership in municipal bond ETFs with independent research firm HIP Investor’s ratings for 120,000 bonds on “human impact and profit” potential. SMI is an actively managed strategy focusing on investment-grade state and local government debt that funds projects promoting sustainable development, including affordable housing, green spaces and hospitals. Using data from HIP Investor (“HIP”), the portfolio management team integrates four screens to determine a bond’s eligibility for inclusion: climate threat resilience; proximity to opportunity zones, which are typically home to lower-income and racially diverse populations; ESG ratings; and SDGs 9, 11 and 12- the SDGs were adopted by the United Nations General Assembly to achieve sustainable development for all, and the specific goals of SDGs 9, 11 and 12 are as follows: SDG 9 is to "build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation," SDG 11 is to "make cities and human settlements inclusive, safe, resilient and sustainable," and SDG 12 is to "ensure sustainable consumption and production patterns."
“For 15 years, HIP’s analytical rigor has evaluated real-world impacts for investors, advisors and fund managers, enabling more capital to flow to innovators bringing sustainable solutions for people, planet and trust,” said R. Paul Herman, CEO and founder of HIP Investor. “This new ETF enables portfolios to focus on meaningful climate action, increasingly sustainable communities and stronger resilience overall.”
“We believe combining active management with the robust analytical data on sustainability provided by HIP results in a compelling, first-to-market municipal bond ETF1. SMI is a welcome addition to our established lineup of seven municipal bond ETFs with currently over $7 billion in combined AUM as of July 31, 2021,” added Colby, who is the portfolio manager of the new strategy.
VanEck is a 2017 signatory to the Principles for Responsible Investment (PRI) and has decades of experience in fixed income and municipal bond strategies. SMI also illustrates the expansion of the firm’s sustainable investing offerings, joining last month’s launch of the VanEck Environmental Sustainability Fund (ENVAX), the first green bond ETF1, VanEck Green Bond ETF (GRNB) and the VanEck Low Carbon Energy ETF (SMOG). HIP is a 2021 signatory to PRI.
VanEck has a history of looking beyond the financial markets to identify trends that are likely to create impactful investment opportunities. We were one of the first U.S. asset managers to offer investors access to international markets. This set the tone for the firm’s drive to identify asset classes and trends – including gold investing in 1968, emerging markets in 1993, and exchange traded funds in 2006 – that subsequently shaped the investment management industry.
Today, VanEck offers active and passive strategies with compelling exposures supported by well-designed investment processes. As of July 31, 2021, VanEck managed approximately $82.1 billion in assets, including mutual funds, ETFs and institutional accounts. The firm’s capabilities range from core investment opportunities to more specialized exposures to enhance portfolio diversification. Our actively managed strategies are fueled by in-depth, bottom-up research and security selection from portfolio managers with direct experience in the sectors and regions in which they invest. Investability, liquidity, diversity, and transparency are key to the experienced decision-making around market and index selection underlying VanEck’s passive strategies.
Since our founding in 1955, putting our clients’ interests first, in all market environments, has been at the heart of the firm’s mission.
About HIP Investor
For the past 15 years, HIP Investor Inc. has served investors, advisors, and fund managers with $7 trillion in AUM to bring ratings, strategies, portfolios, and solutions that seek “human impact and profit (HIP)” since 2006 – years before the terms “impact investing” or ESG were coined. HIP Investor’s Ratings of ESG, SDGs, and Climate Threat Resilience cover multiple asset classes – across 10,000 global equities, 120,000 municipal issuers, 700 real estate investment trusts, 200 sovereigns, as well as venture capital, private equity, private credit, asset backed securities, mortgage-backed securities, and 1000s of mutual funds, ETFs, and separate accounts. As an impact-ratings agency, HIP also rates primary and secondary issuances of corporates and municipalities. As an investment manager, HIP Investor serves investors and advisors of all types, including strategies like the HIP Science-Based Targets for Climate Action, HIP Great Place to Work, HIP Sustainable REITs, and HIP Global Dividends. HIP’s founder and CEO R. Paul Herman authored “The HIP Investor: Make Bigger Profits by Building a Better World,” (Wiley 2010) and co-edited and co-authored “The Global Handbook of Impact Investing: Solving Global Problems Via Smarter Capital Markets Towards a More Sustainable Society,” (Wiley 2021). The VanEck HIP Sustainable Muni ETF is HIP’s first co-branded exchange traded fund.
©2006-2021 HIP Investor Inc. All Rights Reserved. The information contained herein: (1) is proprietary to HIP Investor and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither HIP Investor nor its content providers are responsible for any damages or losses arising from any unauthorized use of this information. Past performance is no guarantee of future results. All investing entails risks.
ESG investing is qualitative and subjective by nature, and there is no guarantee that the factors utilized by VanEck or any judgment exercised by VanEck will reflect the opinions of any particular investor. Information regarding responsible practices is obtained through third-party reporting, which may not be accurate or complete, and VanEck is dependent on such information to implement the investment strategy. Socially responsible norms differ by region. There is no assurance that the socially responsible investing strategy and techniques employed will be successful.
SMI's strategy of investing in municipal debt securities of issuers promoting sustainable development may limit the types and number of investments available to SMI or cause SMI to invest in securities that underperform the market as a whole. As a result, SMI may underperform funds that do not have a sustainable investing strategy or funds with sustainable investing strategies that do not employ HIP Ratings. In addition, SMI relies on the Data Provider for the identification of issuers that promote sustainable development based on their HIP Ratings; however, there can be no guarantee that the Data Provider's methodology will align with SMI's investment strategy or desirable issuers can be correctly identified. Moreover, SDGs 9, 11 and 12 may be modified or abandoned in the future and there can be no guarantee that SMI will be able to continue to use HIP Ratings or find an appropriate substitute ratings system.
An investment in SMI may be subject to risks which include, among others, risks related sustainable impact investing strategy, municipal securities, credit, interest rate, call, data, California, New York, education bond , health care bond, housing bond, transportation bond, management, operational, authorized participant concentration, absence of prior active market, trading issues, market, fund shares trading, premium/discount and liquidity of fund Shares, non-diversified, state concentration risks all of which may adversely affect SMI. Municipal bonds may be less liquid than taxable bonds. There is no guarantee that SMI’s income will be exempt from federal, state or local income taxes, and changes in those tax rates or in alternative minimum tax 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. SMI's assets may be concentrated in a particular sector and may be subject to more risk than investments in a diverse group of sectors.
You can lose money by investing in the VanEck Environmental Sustainability Fund (ENVAX). Any investment in ENVAX should be part of an overall investment program, not a complete program. An investment in ENVAX may be subject to risks which include, among others, investing in derivatives, equity securities, emerging market securities. environmental-related securities, foreign currency transactions, foreign securities, investments in other investment companies, management, market, new fund risk, non-diversification, operational, sectors, small and medium capitalization companies, special purpose acquisition companies. Small- and medium-capitalization companies may be subject to elevated risks.
Investing in “green” bonds carries the risk that, under certain market conditions, the Fund may underperform as compared to funds that invest in a broader range of investments. Investing primarily in “green” investments may affect the Fund’s exposure to certain sectors or types of investments and will impact the Fund’s relative investment performance depending on whether such sectors or investments are in or out of favor in the market. The “green” sector may also have challenges such as a limited number of issuers, limited liquidity in the market and limited supply of bonds that merit “green” status.
An investment in VanEck Green Bond ETF (GRNB) may be subject to risks which include, among others, green bonds, investing in Asian, Chinese and emerging market issuers, foreign securities, foreign currency, credit, interest rate, floating rate, floating rate LIBOR, high yield securities, supranational bond, government-related bond, restricted securities, securitized/asset-backed securities, financial, utilities, market, operational, call, sampling, index tracking, authorized participant concentration, no guarantee of active trading market, trading issues, passive management, fund shares trading, premium/discount risk and liquidity of fund shares, non-diversified and concentration risks, all of which may adversely affect GRNB.
An investment in VanEck Low Carbon Energy ETF (SMOG) may be subject to risks which include, among others, investing in low carbon energy companies, investing in European issuers, foreign securities, foreign currency, depository receipts, utilities, consumer discretionary, industrials and information technology sectors, small- and medium-capitalization companies, equity securities, market, operational, index tracking, authorized participant concentration, no guarantee of active trading market, high portfolio turnover, trading issues, passive management, fund shares trading, premium/discount risk and liquidity of fund shares, non-diversified and concentration risks, all of which may adversely affect SMOG. Foreign investments are subject to risks, which include changes in economic and political conditions, foreign currency fluctuations, changes in foreign regulations, and changes in currency exchange rates which may negatively impact SMOG’s return. Small- and medium-capitalization companies may be subject to elevated risks.
Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider the investment objective, risks, charges and expenses of a Fund carefully before investing. To obtain a prospectus and summary prospectus, which contain this and other information, call 800.826.2333 or visit vaneck.com. Please read the prospectus and summary prospectus carefully before investing.
Van Eck Securities Corporation, Distributor
666 Third Avenue
New York, NY 10017
Chris Sullivan/Julia Stoll