Yorkville ETF Advisors, a New York-based asset manager, put two more ETFs focused on master limited partnerships in the regulatory pipeline just a month after it launched its Yorkville High Income MLP ETF (YMLP - News).
The Yorkville High Income Composite MLP ETF (YMLC) and the Yorkville High Income Infrastructure MLP ETF (YMLI), like Yorkville’s YMLP, will track Solactive indexes. They will also come to market through Exchange Traded Concepts’ “ETF-In-A-Box solution,” according to regulatory paperwork .
The new ETFs would complement YMLP’s exposure by serving up focused exposure to the MLP market that divides the segment into production and transportation on the one hand, and infrastructure on the other.
Until last month, the MLP segment could only be tapped via a group of ETNs—such as the $4.2 billion JPMorgan Alerian MLP ETF (AMJ - News)—as well as a single ETF, the $2.3 billion ALPS’ Alerian MLP ETF (AMLP - News).
MLPs are partnerships that generate most of their income from the natural resources sector, but they make money from fees such as transportation tolls rather than from the underlying commodities themselves. That attribute protects them from volatility in commodities prices.
Also, in part because MLPs aren’t taxed as corporations, they tend to pay hefty dividends, an attractive feature in times of ultra-low interest rates.
Indeed, MLPs have recently been paying higher yields than some other income-producing asset investments, such as REITs and utilities, and they have outpaced many equities-focused portfolios.
What’s more, the pipeline-type business model also shows very low correlation to the broader equities market and the economy in general, making MLPs good diversification tools.
Competition
Last week, Global X Funds also took to the MLP market with the launch of the Global X MLP ETF (MLPA - News).
The Global X fund serves up a portfolio that’s nearly identical to the infrastructure-focused AMLP, but it has the lowest price tag in the segment—0.45 percent.
By contrast, AMLP and most of the ETNs in the space charge 0.85 percent.
Yorkville’s YMLP costs 0.82 percent, though the latest filing didn’t disclose the planned fees for the new funds YMLC and YMLI.
Slicing And Dicing MLPs
YMLC will be a composite portfolio and invest in MLPs involved with everything from mining and production to transportation and retail marketing of natural resources such as petroleum products, natural gas, timber, fertilizers and coal.
YMLI, on the other hand, will focus on infrastructure MLPs, namely on transportation and storage partnerships of oil products and natural gas.
The funds would add to YMLP’s exposure that focuses solely on commodities MLPs such as those involved with the exploration and production of oil and natural gas, as well as the extraction of minerals and shipping of fuels and chemicals.
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