Some Master Limited Partnership ETF Picks for Yield

April 6th at 7:15am by Paul Weisbruch, Street One Financial

AMLP (Alerian MLP ETF, Expense Ratio 0.85%) is the largest ETP in the MLP category, having attracted approximately $5.7 billion in assets under management, slightly edging out competing product AMJ (JP Morgan Alerian MLP ETN, Expense Ratio 0.85%).

The space has been very popular among ETF portfolio managers and investors during the past few years thanks to promising returns as well as attractive yields.

AMLP for example currently has a yield of 5.94% and has largely participated in 2013’s equity rally along with other yield oriented sectors including Utilities for example, and options activity has picked up specifically in this product.

Since options in AMLP do not trade frequently in the marketplace nor do they typically trade in relevant size, when they do, it forces us to pay attention.

The May 17 puts were accumulated in Wednesday’s session as the ETF lost more than 1%.

These options would cover the earnings cycle for major components of AMLP, including KMP (reporting 4/17), EPD (5/2), ETP (5/7), MMP (5/2), and OKS (5/27), and it seems that there is concern that the sector may see additional downside in the near term as participants look eager to lock in 2013’s gains.

There are currently fifteen ETPs dedicated to the MLP space, with AMLP and AMJ being the giants in terms of assets under management at the moment, followed by products including MLPI (UBS E-TRACS Alerian MLP Infrastructure, Expense Ratio 0.85%), MLPN (Credit Suisse MLP Index ETN, Expense Ratio 0.85%), EMLP (First Trust North American Energy Infrastructure, Expense Ratio 0.95%), and YMLP (Yorkville High Income MLP ETF, Expense Ratio 0.82%) among others.

AMJ is the most tenured in the MLP category, having debuted in 2009 (it recently celebrated its fourth birthday), which speaks volumes about how this space has matured and grown in popularity in a short amount of time among ETF investors whom clearly see appeal in exposure to the MLP space in basket form via either in the package of an ETF or ETN.

For more information on Street One ETF research and ETF trade execution/liquidity services, contact Paul Weisbruch at pweisbruch@streetonefinancial.com.

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