However, potential investors should be aware that AMJ’s issuing bank, JPM organ, has stopped issuing new shares, which has resulted in trading premiums versus the index. [Master Limited Partnership ETF Trading at Premium Again]
In an attempt to circumvent the C-Corporation liability within the ETF structure, First Trust created the First Trust North American Energy Infrastructure Fund (NYSEArca: EMLP), an actively managed ETF that limits direct MLP exposure to less than 25% and holds exposure to MLP affiliates, Canadian income trusts and successor companies, pipeline companies, utilities and other energy infrastructure companies. EMLP has a 0.95% expense ratio and a 2.50% 30-day SEC yield. The fund is up 16.3% year-to-date.
MLPs build, acquire and operate transportation assets. While investors link MLPs with energy, specifically natural gas and crude oil, they are more involved with transporting the commodities. Consequently, the performance of MLPs is less dependent on commodity prices than on how much of the commodity is pushed through. [What is an ETF? — Part 30: Master Limited Partnerships]
MLP fund investors will not be required to fill out K-1 forms. Instead, investors will receive a single 1099 form.
For more information on master limited partnerships, visit our MLPs category.
Max Chen contributed to this article.