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.
Next page: The latest news
The Latest News:
- The U.S. shale boom could bolster MLPs.
- As new drilling and production techniques advance, MLPs will benefit by providing the necessary infrastructure to move around the extracted oil and natural gas.
- U.S. crude production hit a 28-year High last week on increased shale oil production, reports Mark Shenk for Bloomberg.
- “This is an incredible phenomena that looks set to continue,” John Kilduff, a partner at Again Capital LLC, said in the Bloomberg article. “There’s a long way to go before we explore and exploit all of the shale deposits out there.”
- The U.S. met 87% of its energy needs in 2013 and touched 90% in December, the most since March 1985, according to the Energy Information Administration.
- The EIA calculates that crude output will average 8.46 million barrels a day this year and 9.24 million per day in 2015, the highest average since 1972.
Direxion Zacks MLP High Income Shares
For past stories in this series, visit our ETF Spotlight category.
Max Chen contributed to this article.