ETF Spotlight on the Direxion Zacks MLP High Income Shares (NYSEArca: ZMLP), part of an ongoing series.
Assets: $20.7 million
Objective: The Direxion Zacks MLP High Income Shares fund tries to reflect the performance of the Zacks MLP Index, which is comprised of 25 Master Limited Partnerships and weighted on a rules- or factor-based methodology, as opposed to traditional market-cap weighted indices.
Holdings: Top holdings include Emerge Energy Services (NYSE: EMES) 5.3%, NuStar GP Holdings (NYSE: NSH) 4.8%, CVR Partners (NYSE: UAN) 4.7%, NuStar Energy (NYSE: NS) 4.4% and PetroLogistics (NYSE: PDH) 4.3%.
What You Should Know:
- Direxion Funds sponsors the ETF.
- ZMLP has a 0.65% expense ratio.
- The ETF has 25 holdings and the top ten positions make up 44.0% of the overall portfolio.
- Component holdings are equally weighted and rebalanced quarterly to make up 4% of the total portfolio.
- The underlying index selects holdings based on various factors, including yield, liquidity and relative value, among others.
- Holdings are ranked based on a quantitative rules-based methodology, including value, liquidity, short interest, dividend yield and other factors and is sorted from highest to lowest.
- ZMLP began trading January 24, 2014.
- The fund is up 2.7% over the past month, up 6.4% over the last three months and up 4.2% since inception.
- The ETF offers a current yield of 5.3%.
- The ETF is structured as a “C-Corp,” so investors will not have to fill out K-1s come tax season.
- However, as a C-Corp, the ETF will owe taxes on the holdings and are subtracted from the fund’s value. [How MLP ETF Structures Affect Yields and Returns]
- MLPs have traditionally provided low correlation to traditional stocks and bonds and offer attractive yields for income investors.
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