The latest fund from Global X tracks the Solactive MLP Composite Index, holds 30 MLPs engaged in transportation, storage, processing, refining, marketing, exploration, production and mining of energy resources, reports Trang Ho for Investor’s Business Daily. MLPA sets itself apart by touting the lowest expense ratio in its sector, at 0.45%. The average for MLP ETFs has been 0.85%. [MLP ETFs Attract Yield Hunters]
Another feature of MLPs include the ability remain steady even when commodity prices are volatile. MLPs generate income by leasing pipelines and storage facilities, dodging exposure to commodity prices. Furthermore, MLPs are a partnership, so corporate federal and state taxes are avoided. Also, MLPs pay shareholders quarterly distributions, which are taxed at individuals’ marginal rates.[Global X Adds MLP ETF to Line Up]
MLPs do face risk just like any other sector, or asset class. They are vulnerable to changing regulation, operational issues within pipelines and lowered volume. Also, there are not automatic revenue bumps that are tied to inflation for natural gas pipelines, reports Bailin.
Other MLP ETFs trading:
Tisha Guerrero contributed to this article.