Alerian, a Dallas-based research group, launched the Alerian MLP ETF (AMLP) on Wednesday, August 25. The company says it is the first exchange-traded fund to access the master limited partnership asset class.
There are several MLP-related exchange-traded notes, or ETNs, currently trading - such as the UBS E-TRACS Alerian MLP Infrastructure ETN (MLPI).
On August 26, the new ETF traded at about $15 a share on volume of 722, 700 shares.
Unlike traditional corporations, MLPs are publicly traded companies that are structured as partnerships that must distribute the majority of their profits and are shielded from certain tax liabilities. As a result, unitholders often enjoy yields of 5-12% on their MLP holdings.
The Alerian MLP ETF provides exposure to the Alerian MLP Infrastructure Index (AMZI), a liquid, midstream-focused subset of energy MLPs that earn most of their cash flow from the transportation, storage, and processing of energy commodities, the company says.
According to a statement, "The index provides diversified, hard-asset exposure specifically to infrastructure investment," says Alerian.
"Alerian is thrilled to provide the index supporting the launch of the first MLP ETF and bring investors a new standard in liquidity and transparency to access the MLP asset class," said Alerian President and CEO Kenny Feng in a press release.
"The Alerian MLP ETF provides a single Form 1099, no K-1s, and allows investors to potentially benefit from return of capital and qualified dividend tax treatment of distributions," he explained. "We believe this product is the answer to what the marketplace has demanded for years and represents a breakthrough in MLP investment."
All K-1 tax forms are received and processed by the Alerian MLP ETF, which ditributes a single Form 1099 to its shareholders.
The fund invests primarily in energy infrastructure companies which may be adversely affected by changes in worldwide energy prices, exploration, production spending, government regulation, changes in exchange rates and depletion of natural resources, according to Alerian.
The new ETF is distributed by ALPS Distributors.