Master Limited Partnerships Yielding Over 5% Get Another ETF

ETF Trends

Master limited partnerships have been popular investments as investors have sought out the relatively stable cash flows offered from the assets. With the growing interest in the area, Barclays has launched its first MLP exchange traded note under its iPath line.

The iPath S&P MLP ETN (IMLP) , which is linked to the performance of the consolidated Volume-Weighted Average Price level of the S&P MLP Index, recently began trading. The underlying benchmark tracks partnerships classified in the GICS Energy Sector and GICS Gas Utilities Industry.

MLPs build, acquire and operate transportation assets. While investors link MLPs with energy, specifically natural gas and crude oil, they are more involved with transporting the commodities. Consequently, the performance of MLPs is less dependent on commodity prices than on how much of the commodity is pushed through. For instance, the MLPs profit the same if crude oil cost $50 dollars a barrel or $100 dollars a barrel. [Master Limited Partnerships]

“As investors continue to seek out investments with higher yield, this ETN offers the potential for income along with upside appreciation via index-linked exposure to US energy infrastructure-focused partnerships,” Kevin Murphy, Head of US Equity and Funds Solutions at Barclays, said in a press release.

According to Deutsche Bank, MLPs are in for a positive year ahead, reports Michael Aneiro for Barron’s.

“We continue to expect investors to favor MLPs in 2013 based on the growth inherent in the $30 billion in organic capital expenditures that are building new infrastructure and the delivery of distribution growth of about 7% on top of the current 6.7% yield,” Deutsche Bank analyst said. “We also view the MLPs as well positioned for upside within the confines of tax-related issues and the current fiscal debate.”

Some other MLP funds include:

  • JP Morgan Alerian MLP Index ETN (AMJ) : 5.35% 12-month yield; up 8.4% over the past year
  • Alerian MLP ETF (AMLP) : 6.24% 12-month yield; up 4.9% over the past year
  • Cushing 30 MLP Index (MLPN) : 5.73% 12-month yield; up 6.8% over the past year

For more information on new products, visit our new ETFs category.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

View Comments