With the capital markets exhibiting signs of a more risk-off sentiment, the search for income-generating assets is more apparent than ever and Cushing® Asset Management is meeting that need. The investment firm, which has a plethora of experience in energy, materials, and industrials, announced on Thursday the debut of a new suite of income focused Equity Sector & MLP ETFs: The Cushing® Sector Plus ETFs.
These new ETFs, which trade on the NYSE ARCA Exchange, are designed to offer investors exposure to the ever-evolving master limited partnership (MLP) and energy infrastructure markets by seeking to replicate the performance of custom indices in energy, utility, transportation, and the energy supply chain.
The funds, their tickers and respective indexes are as follows:
Through a custom yield-weighted approach, constituents of the Cushing® indices are selected from the S&P 500® Energy Index (SPN), S&P 500 Utility Index (S5UTIL), S&P 500 Materials Index (S5MATR), and the Dow Jones Transportation AverageTM (TRAN), and then combined with constituents from the Cushing 30 MLP Index (MLPX).
Each of the Cushing® indices, and consequently the funds, limit the exposure of MLPs to 24 percent at each rebalance, allowing investors to add the income-generating potential that MLPs can bring to a portfolio, but avoiding the receipt of schedule K-1s come tax time.
“We view this new suite of ETFs as the next step in sector and income investing,” said Jerry Swank, Founder and Managing Partner, at Cushing® Asset Management.
“Selecting existing sector indexes that operate fundamentally related businesses to energy MLPs, weighting the constituents on indicated yield, and adding a limited amount of MLPs is designed to produce a higher yield focus while maintaining the desired sector exposure,” added Todd Sunderland, Partner, Head of Risk Management and Quant Strategies at Cushing® Asset Management. “With the approach we’ve taken with the Sector Plus suite, investors are able to add the industry and sector exposure they seek, while avoiding overconcentration and adding income potential in a tax efficient manner.”
“S&P Dow Jones Indices is pleased that Cushing Asset Management has selected our proprietary family of equity indices as the foundation to customize their indices,” said Michael Mell, Senior Director at S&P Dow Jones Indices. “Our Custom Index service provides independently calculated solutions that are designed to meet the unique mandates or investment strategies of our clients.”
Each of these new ETFs carry an expense ratio of 0.65% and you can read more about Cushing® and this new ETF suite here: CushingETFs.com