Barclays, the U.K.-based bank that backs the iPath family of
ETNs, today will launch the firm's second ETN focused on master
limited partnerships-but this one under its "ETN+" brand-expanding
its footprint in a segment of the market anchored by the $5.4
billion JP Morgan Alerian MLP ETN (NYSEArca:AMJ).
The Barclays ETN+ Select MLP ETN (NYSEArca:ATMP) is linked to
the Atlantic Trust Select MLP Index, and focuses on what the
company calls the "higher end of the MLP space," or essentially
midstream MLPs that show the highest credit rating quality. That's
to say that ATMP, tapping into 20 to 100 MLPs, is designed to
complement the exposure offered by Barclay's other ETN-the broader,
two-month-old iPath S&P MLP ETN (NYSEArca:IMLP).
Securities in ATMP must make it past screens that look for
long-term credit rating; cash flow; size-as measured by free-float
market capitalization; and trading value, according to the
prospectus. The portfolio may include both limited partnership
interests in MLPs and interests in the general partner of a
ATMP, costing 0.95 percent, comes just two months after the
launch of IMLP, an ETF also backed by Barclays, but belonging to
the iPath family of strategies that counts on BlackRock for
marketing. The "ETN+" family of ETNs is designed to be more
narrowly focused than its iPath counterparts.
MLPs are U.S. energy assets created in the mid-1980s and have
been used by many as safety investments, much like an allocation to
U.S. Treasurys, and one that is known to deliver solid yields.
They are essentially partnerships that trade on a stock exchange
like a corporation, but without federal income tax liability at the
entity level, because they derive most of their revenues from
steady fees such as interest, dividends, real estate rents,
transportation and storage.
Because MLPs are well known for the steady dividends they
deliver, they have grown in popularity with investors who are
looking for income at a time of compressed yields in the more
traditional fixed-income space. But MLPs aren't all created equal,
and ATMP looks to weed out the riskier fare, Adam Karpf, portfolio
manager and managing director at Atlantic Trust told
'MLPs have been a very successful asset class over the past 10
years, and with the success of MLPs, the asset class has attracted
some nontraditional assets such as coal, propane, refining assets,'
Karpf, whose firm is behind the index benchmarking ATMP, said. 'We
think investors buy MLPs with the objective to get exposure to
midstream infrastructure businesses like pipelines and processing
'By removing some of the lower quality nontraditional assets and
focusing on midstream assets, the index provides access to higher
quality, stronger growth MLPs that also carry low risk compared to
other assets,' he added. 'You can't paint all MLPs with the same
brush. There are differences in quality levels between the
ATMP currently pegs its benchmark's average yield at 5.5
percent, with annualized returns clocking in at 12.5 percent, the
prospectus said. What's more, MLPs as an asset class have seen a
'consistent' distribution growth rate of 6 to 8 percent a year in
the past decade, Karpf noted.
The Atlantic index, which was launched in February, rebalances
Permalink | 'copy; Copyright 2009 IndexUniverse LLC. All rights
Don't forget to check IndexUniverse.com's ETF Data
2013 IndexUniverse LLC
. All Rights Reserved.