Denver-based exchange traded fund (ETF) provider ALPS Advisors is planning to bring the first ETF to focus on master limited partnerships (MLPs) to market. Until now, exchange traded product investors could only get access to the space via exchange traded notes (ETNs).
MLP-based funds appeal to investors seeking income. The filing, dated June 10, didn’t mention an expense ratio or the ticker symbol for the new fund, the Alerian MLP ETF. Steve Dew and Oliver Ludwig for Index Universe report that the ETF will track the Alerian MLP Infrastructure Index, a group of 25 MLPs that earn the majority of their income from the transportation and storage of energy commodities. [MLP ETNs: Another Source of Income?]
The annual dividend yield of the Alerian MLP Infrastructure Index was 6.93% at the end of March. The 10 largest holdings in the fund at that time were either natural gas pipeline operators or petroleum transportation firms. [Why Natural Gas ETFs Are Winning In BP Disaster.]
Unlike most other investment companies that have no obligation to do so, by law, the ETF will have to pay applicable federal and state corporate income taxes on taxable income. This is because the fund will invest in MLPs that own energy assets.
For more stories about new ETFs, visit our New ETFs category.
Tisha Guerrero contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.