VanEck HIP Sustainable Muni ETF's Average People Pillar and Process Pillar ratings result in a Morningstar Medalist Rating of Neutral. The portfolio maintains a cost advantage over competitors, priced within the lowest fee quintile among peers.  

 The strategy benefits from its experienced portfolio management team. This is a positive driver for the strategy's Average People Pillar rating. The fund's assessment garners an Average Process Pillar rating. The strategy's parent organization earns the firm an Average Parent Pillar rating, and this rating is inherited from vehicles belonging to the same branding entity and is indirectly assigned by an analyst.

Analyst Rating

Morningstar's style-agnostic evaluation of this fund's process seeks to understand whether the strategy has a performance objective and sensible, repeatable execution. VanEck HIP Sustainable Muni ETF earns an Average Process Pillar rating.    The main contributor to the rating is the firm's five-year retention rate of 83% over the period. A reasonable level of diversification across individual securities also contributes to the process. The fund's top 10 holdings account for 26% of assets. Lastly, the process is limited by its parent firm's subpar risk-adjusted performance, as shown by the firm's average 10-year Morningstar Rating of 2.6 stars. A lower star rating suggests that the firm has struggled to outperform on a risk-adjusted basis.

 The investment strategy as stated in the fund's prospectus is as follows: 


The investment seeks current income generally exempt from federal income tax.  The fund normally invests at least 80% of its total assets in investments the income from which is exempt from U.S. federal income tax. The fund is an actively managed exchange-traded fund (“ETF”) that seeks to achieve its investment objective by investing, under normal circumstances, in investment grade municipal debt securities that fund issuers with operations or projects helping to promote progress towards sustainable development, in alignment with the goals and metrics defined by the United Nations Sustainable Development Goals (“SDGs”) 9, and 11 and 12. The fund is non-diversified.

 This strategy's 12-month yield is 2.1%, lower than its average peers' 3.3%. It also has a 3.2% 30-day SEC yield (a measure similar to yield-to-maturity). Typically, a lower yield comes with the benefit of less credit risk.

Average

Process

VanEck HIP Sustainable Muni ETF earns an Average People Pillar rating. The primary contributor to the rating is the strategy's fees, which rank in its category's least expensive fifth. A higher expense ratio reduces net returns, so low costs give this team an advantage. The stability of the management team also influences the rating. Specifically, the fund has not seen a manager change in the last two years. Lastly, the rating is limited by the combined average five-year excess return of each manager, which shows that the funds they manage have fallen short of their respective category average.


James T. Colby’s veteran status, with over 25 years of listed portfolio management experience, brings a wealth of experience to the table. The strategies they currently manage have an average Morningstar Rating of 2.4 stars, demonstrating disappointing risk-adjusted performance compared with category peers. James T. Colby has an experienced listed co-manager. Together, they average 17 years of listed portfolio management experience. None of the portfolio managers here invest in this fund. This hurts the rating because manager investment would align their interests with the strategy's investors.

People

VanEck’s ownership structure and specialization make it unique among industry peers. The firm’s founding family and namesake still have control, and its product lineup still reflects its legacy as a specialist in niche market segments. VanEck earns an Average Parent Pillar rating. 

Founded by John van Eck in 1955, the firm staked its claim in the industry by capitalizing on burgeoning markets. Starting with the opening of Western Europe to U.S.-based investors in the wake of the Marshall Plan, VanEck’s largest and most successful products provide exposure to areas of the market that are off the beaten path, such as hard assets, emerging-markets debt, and below-investment-grade-rated corporate debt.

Through its history, VanEck has taken an opportunistic approach to product development. For instance, since 2018, VanEck has launched strategies that provide exposures ranging from international REITs to companies involved in video game development. Regardless of where their reach takes them, however, VanEck builds a case that the strategy will be relevant over the long term and that its risks must be easy to understand. However, not all its products catch on, and the firm has shuttered several offerings in the last decade. 

VanEck remains a privately held firm, wholly owned by CEO Jan van Eck and his family. Although this enables the firm to focus on the long term and the firm offers some employees participation in profits, the firm hasn’t used equity as a recruiting and retention tool and introduces some key-person risk in the executive suite.

Parent

VanEck HIP Sustainable Muni ETF

The VanEck HIP Sustainable Muni ETF (SMI) is an actively managed exchange-traded fund (“ETF”) that seeks current income generally exempt from federal income tax by investing in investment grade municipal debt securities that have been issued to fund operations or projects that support or advance sustainable development, as well as promote positive social and environmental outcomes.

SMI is an actively managed fund that provides exposure to AMT-free, investment-grade US municipal bonds of any maturity that support sustainable development.

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