Income seekers have a new option available as Global X Funds, a provider of specialized exchange traded fund products, launched a new low-cost master limited partnership fund on Thursday.
Global X MLP ETF (NYSEArca: MLPA) tries to reflect the performance of the Solactive MLP Composite Index, which is comprised of U.S. MLPs that engage in the transportation, storage, processing, refining, marketing, exploration, production and mining of natural resources.
MLPs typically cover the energy industry. They own and operate infrastructure in the supply chain of energy products. Since they get paid by the amount of services they provide, commodity prices have a lesser affect on MLP revenues. To qualify as an MLP, the partnership is also required to pay out the majority of its operating cash flows as quarterly distributions, which make MLPs very attractive as income streams. [MLP ETFs Attract Yield Hunters]
The asset class has also historically shown low correlations with the broader market, providing investors with a portfolio diversifier.
According to a press release, the MLPA fund maintains a low expense ratio of 0.45%, compared to the industry average of 0.85%.
“The Global X MLP ETF provides cost effective access to the MLP sector with a much lower fee than the industry average,” Bruno del Ama, chief executive officer of Global X Funds, said in the press release.