If you're one of the many investors seeking yields right now, a
new way to get them is now here: the industry's first exchange
traded fund (
) aimed at master limited partnerships (MLPs) launched today.
Alerian MLP ETF (NYSEArca: AMLP)
, marketed by
, and will track a subset of the master limited partnership market
- otherwise known as MLPs. Until now, exchange traded notes (ETNs)
were the only way to access the asset class. AMLP tracks the
Alerian MLP Infrastructure Index and has an expense ratio of
According to Tom Lauricella for
The Wall Street Journal
, MLPs are mostly companies that operate and own natural-gas and
oil pipelines and storage facilities. The collect payments from
those who use their properties. In recent years, they've benefited
from the astronomical growth seen in energy infrastructure. [
High Yield MLPs Attract Investors.
A few other facts about the industry include:
- Payouts from MLPs average just south of 7%; with 10-year
Treasury yields below 2.5%, this is very appealing for
- MLP securities are technically stocks, but the companies are
structured as limited partnerships and shares all profits with
More About MLP ETFs And ETNs.
- Distributions aren't taxable until shares are sold.
According to Dividend Detective
, MLPs work like this:
Crude oil pipeline operators are steady in business, and are
based on the amount of volume transported, not the price of oil.
Natural gas operators are based on the price of natural gas due
to the fact that they are based on gathering and processing
contracts which expose the operators to the changes in the pries
of natural gas and byproducts.
In addition to the new ETF, there are a number of MLP ETNs
available. For more stories about MLPs,
the MLP category
Credit Suisse Cushing 30 MLP Index (NYSEArca:
UBS E-TRACS 2x Long Alerian MLP Infrastructure ETN
UBS E-TRACS Alerian MLP Infrastructure ETN (
UBS E-TRACS Alerian Natural Gas MLP ETN (
JPMorgan Alerian MLP Index ETN (NYSEArca: AMJ)
Tisha Guerrero contributed to this article.