Global X, the New York-based ETF sponsor known for its lineup
of unique sector and commodities
, added another fund focused on master limited partnerships
Tuesday with the debut of the Global X Junior MLP ETF (
The Global X Junior MLP ETF is the firm's second MLP ETF after
the Global X MLP ETF (NYSE:
), which debuted in April 2012 and now has over $25.8 million in
assets under management.
MLPJ becomes the second MLP-related exchange product to debut
this year. The iPath S&P MLP ETN (NYSE:
) has an inception date of January 3 and
already has nearly $26 million in assets
MLPJ, which has an annual expense ratio of 0.75 percent, will
track the Solactive Junior MLP Index. That index is home to 25
stocks and devotes almost 44 percent of its weight to exploration
and production names. Another 39.5 percent of its weight goes to
energy transportation and storage firms while 13.4 percent is
allocated to refining and distribution names,
according to the ETF's fact sheet
Top holdings in the index include Suburban Propane Partners
), newly public Northern Tier Energy (NYSE:
), Alliance Resource Partners (NASDAQ:
), TC PipeLines (NYSE:
) and Natural Resource Partners (NYSE:
MLP exchanged traded products include the JPMorgan Alerian MLP
), the Alerian MLP ETF (NYSE:
) and the Yorkville High Income MLP ETF (NYSE:
) have been embraced by income-hungry investors. AMLP had almost
$4.8 billion in assets as of January 14 while YMLP has raked in
almost $107 million in AUM in just 10 months of trading.
MLPJ will likely carry on the tradition of high-yielding MLP
exchange-trade products as its top holdings sport some impressive
yields. For example, Suburban Propane yields 8.2 percent while
Northern Tier currently yields a whopping 24.1 percent. Alliance
Resources and Natural Resource Partners yield 6.8 percent and
10.5 percent, respectively.
MLPJ will pay quarterly income distributions and is eligible
to be included in retirement accounts such as IRAs and 401(k)
Investors should note an an often overlooked aspect to MLP
exchange-traded products. That being tax treatment of these funds
can lead to increased expenses. ETFs such as AMLP and YMLP are
structured as C-corporations, meaning investors are subject to
35 percent corporate federal income tax
, plus some state taxes.
Traditional ETFs do not expose investors to entity-level tax
liabilities, but the structure of some MLP funds means investors
face higher expenses than just the stated expense ratio. For
AMLP's web site
shows a management fee of 0.85 percent for that fund, but total
operating expenses of 4.86 percent, which is extremely high by
the standards of ETFs.
For more on ETFs, click
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