IQ MacKay Municipal Intermediate ETF’s Process Pillar rating is just average, but a strong management team still helps this strategy retain its Morningstar Medalist Rating of Bronze. The portfolio maintains a cost advantage over competitors, priced within the least expensive fee quintile among peers.  

 The management team's considerable industry experience drives a High People Pillar rating for the strategy. The strategy earns an Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an underweight position in A rated bonds and has an overweight in debt with 10- to 15-year maturities compared with category peers. The strategy's parent organization has room for improvement; it has, for instance, low portfolio manager retention and an unsuccessful risk-adjusted track record. As a result, the firm gets an Average Parent Pillar rating.

Analyst Rating

Morningstar's evaluation of this fund's process seeks to understand management's investment philosophy, and whether it has been applied consistently over time and can add value across the market cycle. IQ MacKay Municipal Intermediate ETF earns an Average Process Pillar rating.   The largest contributor to the rating is the fund's excellent long-term risk-adjusted performance. This can be seen in its five-year alpha calculated relative to the category index, which suggests that the managers have shown skill in their allocation of risk. The firm's five-year retention rate of 83% also underpins the rating. Lastly, the process is limited by the parent firm's five-year risk-adjusted success ratio of 43%. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median Morningstar Risk-Adjusted Return for the period. The parent's subpar success ratio suggests that the firm could do better across its fund lineup.

 Compared with other funds in the Muni National Interm Morningstar Category, this fund, historically, hews closely to peers' credit and interest-rate sensitivity. Opening the analysis to additional factors, the portfolio has displayed three biases over time, whether towards or away from certain fixed-income instruments. Relative to the average strategy in the category, the managers have been underweight A rated bonds. Additionally, there's been an overallocation to debt with 10- to 15-year maturities. And finally, the fund leans meaningfully toward cash.

 This strategy has a 3.1% 12-month yield, higher than its average peer's 2.6%. In addition, it has a 3.3% 30-day SEC yield (a measure similar to yield-to-maturity). Typically, higher yields come at the cost of higher credit risk. But that isn't always the case. Over the past 12 months, the average yield of the fund has been higher than the average yield of its Morningstar Category peers. The portfolio has a higher average surveyed credit quality of AA, compared with the typical peers' A, and it holds no non-investment-grade assets, despite the average peers' 1%. Strategies that take on less credit risk can often shoulder more-adverse market conditions.

Average

Process

IQ MacKay Municipal Intermediate ETF benefits from an experienced corps of portfolio managers, despite standard portfolio manager turnover. The former bolsters the strategy's High People Pillar rating. Michael Petty’s veteran status, with over 25 years of portfolio management experience, brings a wealth of experience to the table. The average Morningstar Rating of the strategies they currently manage is 3.7 stars, demonstrating encouraging risk-adjusted performance. A large cast of six additional named managers adds to the team's appeal, averaging 15 years of portfolio management experience. As a team, they manage two investment vehicles together, with a Bronze asset-weighted average Morningstar Medalist Rating, demonstrating their potential to deliver positive alpha in aggregate.  The fund has had about average portfolio manager turnover compared to other teams. Long-term stability strengthens a team's rating as it tends to support positive results. However, the most recent documented departure was 23 months ago. 

 Note: The People Pillar rating is indirectly assigned by an analyst. The longest-tenured manager of the fund also manages a different product rated by an analyst. Their analyst-assigned People Pillar rating is combined here with the People scores (algorithmic or analyst-assigned) for the fund’s other managers on a tenure-weighted basis.

High

People

New York Life Investments' collection of autonomous investment boutiques will have a new leader in May 2023, and it will take time to assess his impact. The firm keeps its Average Parent rating.
New York Life, the insurance giant that owns NYL Investments, tapped Naïm Abou-Jaoudé to be the asset manager's CEO after the previous CEO departed. Abou-Jaoudé inherits a firm that has grown by building internally and through acquisition. The firm offers mandates in partnership with 13 different asset managers--eight of which are wholly or partially owned affiliates – through several global outlets. Most U.S. funds fall under the established MainStay brand, whereas IndexIQ oversees a growing lineup of ETFs managed both internally and by other affiliates. Candriam, at which Abou-Jaoudé has been CEO even prior to its 2014 acquisition by NYL Investments, takes the lead in Europe through its own offerings and through those subadvised by other boutiques.
Plenty of these capabilities are compelling, with Candriam and fellow affiliates MacKay Shields and Ausbil sporting standout teams in several wheelhouses. Yet many of the boutiques have also struggled with managing bloated lineups or with improving lagging teams. NYL Investments hasn't shied from changing subadvisors or merging platforms and doesn't have a spotless record of managing capacity or of avoiding trendy offerings.

Parent

IQ MacKay Municipal Intermediate ETF

MMIT is actively managed to provide enhanced total-return potential by investing mainly in investment-grade, AMT-free US municipal bonds with duration between 3-10 years.

Municipal bonds are participating in the 2022 fixed income market tale of woe, but broad-based municipal muni bond benchmarks are outperforming aggregate bond counterparts and some experts see opportunity in municipal debt.

There's Value to Be Had in Municipal Bonds

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Truly active managers shine in challenging investment environments, especially when they are given a flexible mandate. With tax-loss harvesting, active investors can deliberately sell at a loss to offset taxes on gains elsewhere in a portfolio.

Muni Investors Stay Flexible As Rates Rise

As the municipal bond market absorbs more inflows. assets like the IQ MacKay Municipal Intermediate ETF (MMIT) are worth considering.

The Upheaval in Municipal Bonds Shows No Signs of Slowing

With higher yields and more stability to offer fixed income investors, municipal bonds are all the rage in the debt market. A pair of active funds to consider are the IQ MacKay Municipal Intermediate ETF (MMIT) and the IQ MacKay Municipal Insured ETF (MMIN).

Are We Entering a ‘New Golden Decade' for Municipal Bonds?

The coronavirus pandemic triggered widespread market volatility, but it also offered an opportunity for active managers to position in attractively priced areas of the market. Fixed-income investors can also turn to actively managed municipal bond exchange traded fund strategies that are better equipped to adapt to changing market conditions.

Active Muni Bond ETFs Can Help Enhance an Investor’s Portfolio

ETF Trends CEO Tom Lydon discussed the IQ MacKay Shields Municipal Intermediate (MMIT) on this week’s “ETF of the Week” podcast with Chuck Jaffe on the MoneyLife Show. MMIT seeks current income exempt from federal income tax.

ETF of the Week: IQ MacKay Shields Municipal Intermediate (MMIT)

As bond investors look to the current municipal bond landscape, one may consider targeted exchange traded fund strategies to incorporate munis into a diversified fixed-income portfolio better. In the recent webcast, Insights into the Evolving Municipal Bond Market, David Dowden, Managing Director, Portfolio Manager, MacKay Municipal Managers; and Christopher Roberti, Managing Director, Senior Client Portfolio [.

Active Muni ETFs to Better Navigate a Changing Landscape

Municipal bonds offer investors another avenue for income generation beyond the traditional Aggregate Bond Index exposures, providing opportunities to enhance and diversify yields. In the upcoming webcast, Insights into the Evolving Municipal Bond Market, David Dowden, Managing Director, Portfolio Manager, MacKay Municipal Managers; and Christopher Roberti, Managing Director, Senior Client Portfolio Manager, MacKay Municipal Managers, [.

Insights into the Evolving Municipal Bond Market

News for IQ MacKay Municipal Intermediate ETF ETF (MMIT)