Denver-based ALPS introduced the Alerian Energy Infrastructure ETF (NYSEArca: ENFR) today, an ETF designed to give investors exposure to energy infrastructure firms as well as high-yielding master limited partnerships (MLPs).
The Fund provides exposure to the Alerian Energy Infrastructure Index, which is intended to give investors a transparent and intuitive means of tracking the overall performance of the North American Energy Infrastructure sector. The Index is comprised of equity securities of issuers headquartered or incorporated in the U.S. and Canada, according to a statement issued by ALPS.
ENFR takes a similar approach to the actively managed First Trust North American Energy Infrastructure Fund (NYSEArca: EMLP) and the newly minted Global X MLP & Energy Infrastructure ETF (NYSEArca: MLPX) which is to cap exposure at 25%. [How MLP ETFs Impact Returns]
MLP ETFs that hold more than 25% of their portfolio in MLPs are structured as C-Corporations in order to track an underlying MLP-related index. Due to the C-Corporation structure, they must pay corporate income tax on distributions before passing them to investors. Consequently, MLP ETFs may incur higher fees that would cut into overall performance, leading to an underperformance compared to the underlying benchmark. [MLP ETFs Try to Address Tax Headaches]