UBS' family of exchange traded products, ETRACS, welcomed a
new member with a familiar face Wednesday:ETRACS Alerian MLP
Index ETN (
AMU
).
It's the same asJPMorgan Alerian MLP Index ETN (
AMJ
), but with a slightly lower annual management fee of 0.80% vs.
0.85% for AMJ.
ETRACS is picking up where JPMorgan left off. A month ago,
JPMorgan announced limiting the creation of AMJ shares to 129
million. AMJ is the most popular exchange traded note with $5.1
billion in assets.
Halting new creations caused AMJ to trade like a closed-end
fund, which issues a finite number of shares. When demand
outstripped supply, shares traded at a premium to their net asset
value. AMJ shares traded as much as 2.7% above their NAV on June
29 before falling back down, according to IndexUniverse.com
data.
AMU's underlying index currently yields 5.87%, according to
UBS. It offers exposure to 50 stocks, includingEnterprise
Products Partners (
EPD
), weighted at 15% of assets; Kinder Morgan Energy Partners (
KMP
) 10%; Plains All American Pipeline (
PAA
)7%; Energy Transfer Equity (ETE) 5% and Magellan Midstream
Partners (MMP) 4%.
Market Vectors and Global X coincidentally both launched ETFs
tracking preferred stock indexes this week.
Market Vectors Preferred Securities ex Financials ETF (PFXF)
tracks the Wells Fargo Hybrid and Preferred Securities ex
Financials Index, holding preferred shares from all U.S. sectors
except financials.
Preferreds And Convertibles
The index has 68 securities, including ones that Wells Fargo
deems "functionally equivalent to preferred securities such as
convertible securities, depository preferred securities and
perpetual subordinated debt."
The ETF's largest sectors are real estate investment trusts or
REITs, weighted 31%; electronics 26%; automakers 12%; telecom 8%;
insurance 6% and energy producers 5%. The underlying index
currently shows an annual yield of 6.78%. It charges a net annual
expense ratio of 0.40%, which Market Vectors says is the lowest
among preferred stock ETFs.
Global X Super Income Preferred ETF (SPFF) tracks the S&P
Enhanced Yield North American Preferred Stock Index. It targets
the highest-yielding stocks traded in the U.S. and Canada that
meet size, liquidity, ratings and other criteria.
The 47-stock index most heavily weights financials at 74% of
assets, insurance 8%, real estate 6% and energy 4%. Global X did
not state how much the index yields. SPFF charges a 0.58% annual
fee.
PFXF and SPFF will compete withPowerShares Preferred Portfolio
(PGX), iShares S&P U.S. Preferred Stock Index Fund (PFF)
andSPDR Wells Fargo Preferred Stock (PSK).