UBS Investment Bank expanded its line of ETRACS exchange traded notes with a new strategy that draws inspiration from oil tycoon T. Boone Pickens to help investors track companies involved in the energy space.
On Tuesday, UBS launched the ETRACS NYSE Pickens Core Midstream Index ETN (NYSEArca: PYPE), which has a 0.85% expense ratio.
The ETRACS NYSE Pickens Core Midstream Index ETN tries to reflect the performance of the NYSE Pickens Core Midstream Index, which includes U.S. corporations and master limited partnerships that represent U.S. midstream energy fundamentals, agnostic of entity structure, according to the ETN’s prospectus. The ETN covers companies that earn the majority of their operating income from midstream energy activities, including gathering and processing, liquefaction, pipeline transportation, rail terminaling and storage of energy commodities.
Specifically, underlying holdings are based off FactSet RBICS where all companies including corporations and MLPs classified under the Level 2 classification of “Downstream and Midstream Energy” are extracted.
Refiners are excluded as they are more representative of the downstream element of the energy value chain, not midstream. Refining logistics are included as they are more representative of midstream activities. Retail propane marketing is excluded due to that business activity being classified as a downstream activity. Lastly, compression is excluded due to that business activity being classified as an upstream.
Top Holdings
PYPE’s top holdings include Energy Transfer Partners (ETP) 8.8%, Kinder Morgan (KMI) 7.4%, Enterprise Products Partners (EPD) 7.3%, Magellan Midstream Partners (MMP) 7.0% and ONEOK (OKE) 7.0%.
Unlike exchange traded funds, ETNs are a type of are type of senior, unsecured debt securities provided by an underwriting bank. In this case, the ETNs are obligations of the UBS.
T. Boone Pickens has also lent his name to TriLine Index Solutions for the NYSE Pickens Oil Response ETF (NYSEArca: BOON), which tracks companies that are positively correlated with changes in the price of ICE Brent Crude Oil Futures.
For more information on new fund products, visit our new ETFs category.