What’s an investment conference without the excitement of a product launch?
Last week, the biggest player in the ETF space, Charles Schwab, launched its commission-free ETF platform.
And on Tuesday, one of the smaller players in that space launched a niche but not insignificant new fund: the Yorkville High Income Infrastructure MLP ETF (YMLI).
Yorkville specializes in MLP research and asset management, an area of ETFs with few competitors. Its launch last April of the Yorkville High Income MLP ETF was one of the most successful product launches in terms of net asset inflows last year, indicating growing interest in master limited partnerships’ income potential.
And while Yorkville’s Darren Schuringa, an intelligent and articulate spokesman for his product, was happy to tell me about the many virtues of infrastructure investing, the most eloquent testimony may have come from a Morgan Stanley advisor seated nearby who, on hearing our discussion, chimed in: “I don’t have a single portfolio without it [infrastructure].”
The advisor shared Schuringa’s view that infrastructure is a vital, safe and neglected asset class.
For Schuringa’s part, the reasons for owning U.S. infrastructure were many, starting with some important basics:
“MLPs offer low correlations to equities, fixed income and commodities.
“Also, it’s the only pure play—without the commodity exposure—on the shale revolution. You’re investing in the U.S.,” which he says offers comparative safety and is “good for geopolitical reasons.”
In other words, this is like buying North Dakota (now the No. 2 energy producer, after Texas and ahead of Alaska, thanks to shale) if ETFs would add state funds to their existing complement of country funds.
“You can buy Chesapeake (CHK), but 100% of their exposure is not going to be to shale.”
Schuringa’s challenge to investors is: “Do you have infrastructure in your portfolio? You have REITs, but do you have U.S. infrastructure?
The comparison to REITS is an important one, since investors usually turn to them for income, diversification and growth. In fact, REITs were the best performing asset class in 2012, according to S&P, and have topped the investment charts for the past several years.
Yet Schuringa believes they compare unfavorably to infrastructure MLPs.