Investors interested in exposure to Puerto Rico’s debt can take a look at a couple high-yield municipal bond ETFs. Puerto Rico is the third largest component in the popular Market Vectors High Yield Municipal Index ETF (NYSEArca: HYD). HYD has an effective duration of 10.7 years and a 5.76% 30-day SEC yield, or a 9.54% taxable equivalent 30-day SEC yield for those in the highest income bracket.
Additionally, the SPDR Nuveen S&P High Yield Municipal Bond ETF (NYSEArca: HYMB) includes a 3.3% exposure to Puerto Rico, HYMB has a 9.5 year duration and a 5.08% 30-day SEC yield, or a 8.98% taxable equivalent 30-day SEC yield for those in the highest income bracket.
Alternatively, the recently launched Market Vectors Short High-Yield Municipal Index ETF (NYSEArca: SHYD) tries to limit interest rate risk with a lower effective duration of 5.12 years but comes with a smaller 4.62% 30-day SEC yield, or a taxable equivalent of 7.65% for those in the highest income bracket. SHYD also has the largest weight to Puerto Rico at 21.3%. [Market Vectors Rolls Out Short-Term High-Yield Muni ETF]
There are currently no Puerto Rico municipal bond-specific ETF, but Van Eck’s Market Vectors is working on one and registered the Market Vectors Puerto Rico Municipal Index ETF last year.
For more information on the munis market, visit our municipal bonds category.