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MLPs Put Inside ETF Wrapper
August 26, 2010
SAN DIEGO (ETFguide.com) – Master limited partnerships (MLPs) are now available in the exchange-traded fund (ETF) package.
ALPS Distributors introduced the Alerian MLP ETF (NYSEArca: AMLP) yesterday. The new ETF is linked to the Alerian MLP Infrastructure Index which is comprised of 25 midstream energy master limited partnerships. The index is float-adjusted market capitalization-weighted.
MLPs are publicly traded partnerships engaged in the transportation, storage and processing of minerals and natural resources. By confining their operations to these specific activities, their interests, or units, are able to trade on public securities exchanges exactly like the shares of a corporation, without entity level taxation
Top holdings inside AMLP include Enterprise Products Partners, Kinder Morgan Energy Partners and Magellan Midstream Partners.
The fund is taxed as a regular corporation for federal income tax purposes. This differs from most investment companies, which elect to be treated as “regulated investment companies” under the tax code in order to avoid paying entity level income taxes.
AMLP will offer exposure to MLPs with lower costs compared to closed-end funds that invest in the same category.
According to the prospectus, ALMP’s annual expense ratio is 0.85%.
In related new ETF offerings, Van Eck Global launched the Market Vectors Index India Small Cap Index Fund (NYSEArca: SCIF). Top industry sectors within SCIF are industrials (26.80%), financials (20.40%) and materials (13.70%).
The fund follows a basket of 122 small company stocks from India with a weighted market size of $600 million. SCIF’s annual expense ratio is 0.85%. |
