Money continues to pour into the thematic ETF space. Global X has several noteworthy funds in the mix of it all.
“Funds focused on specific market niches raked in piles of cash in the first two months of the year, a trend that’s poised to rapidly accelerate, according to a new survey,” a Bloomberg article noted. “A whopping 80% of global ETF investors plan on increasing their exposure to so-called thematic ETFs this year, Brown Brothers Harriman & Co. found in their annual report released Monday.”
3 Global X ETFs Worth Looking At
The Global X Cannabis ETF (POTX) seeks to provide investment results that correspond generally to the price and yield performance of the Cannabis Index. The underlying index is designed to provide exposure to exchange-listed companies that are active in the cannabis industry, as defined by Solactive AG, the provider of the underlying index.
Overall, POTX gives investors access to:
- High Growth Potential: POTX enables investors to access a basket of high growth potential companies from across the cannabis industry.
- An Unconstrained Approach: The ETF’s composition transcends classic sector, industry, and geographic classifications by tracking an emerging theme.
- ETF Efficiency: In a single trade, POTX delivers targeted access to dozens of companies with significant exposure to the cannabis theme.
Next up is the Global X MLP ETF (MLPA), which seeks to replicate a benchmark that offers exposure the overall performance of the United States master limited partnerships (MLP) asset class. MLPs have become very popular in recent years for primarily two reasons: (1) required quarterly distributions provide a steady stream of current income, and (2) because they are partnerships, MLPs avoid corporate income taxes at both the federal and state level as the the tax liability is passed through to the individual partners.
See also: Why MLP Funds like AMLP Are Making a Comeback
By generating at least 90% of income from natural resource-based activities such as transportation and storage, an entity can qualify as an MLP and not be taxed as a corporation. So the IRS treats shareholders of an MLP as partners, making the MLP itself a pass-through entity, which means that taxes are avoided at the corporate level, and investors avoid the double taxation of income.
Lastly, the Global X MLP & Energy Infrastructure ETF (MLPX) seeks to provide investment results that correspond to the Solactive MLP & Energy Infrastructure Index. The index tracks the performance of midstream energy infrastructure MLPs and corporations.
Overall, MLPX gives investors the following benefits:
- Tax Efficiency: Unlike traditional MLP funds, MLPX avoids fund level taxes by limiting direct MLP exposure and investing in similar entities, such as the General Partners of MLPs and other energy infrastructure corporations.
- Midstream Exposure: MLPX invests in midstream infrastructure entities such as pipelines and storage facilities that have less sensitivity to energy prices.
- High Income Potential: The fund invests in MLPs and other energy infrastructure companies that may result in above-average yields.
For more news and information, visit the Thematic Investing Channel.