Pipeline Profits Highlight Latest Batch of ETFs

by Kyle Woodley | April 23, 2012 12:15 pm

The Global X MLP ETF (NYSE:MLPA[1]) is the newest in a small field of funds focusing on yield-happy master limited partnerships (MLPs) within the energy sector.

Its biggest boast is its expense ratio, which at 0.45% is about half that of the competition, namely the Alerian MLP ETF (NYSE:AMLP[2], 0.85%) and the Yorkville High Income MLP Exchange Traded Concepts (NYSE:YMLP[3], 0.82%) fund.

Global X CEO and Portfolio Manager Bruno del Ama touted both the asset class and the expense difference in a recent interview, saying, “These are very high-income players that a lot of investors are very attracted to. . . . And this fund is a better way to achieve that high income because, in essence, you get another 40 basis points of income that is not being deducted from what you receive from the MLPs.”

Global X is not allowed to predict what its yield might be, but the similarly constructed AMLP yields about 6%.

MLPA’s top holdings, all with 5%-plus weighting, include Magellan Midstream Partners LP (NYSE:MMP[4]), Plains All American Pipeline LP (NYSE:PAA[5]), Buckeye Partners LP (NYSE:BPL[6]), Enterprise Products Partners (NYSE:EPD[7]), Energy Transfer Partners LP (NYSE:ETP[8]) and Enbridge Energy Partners LP (NYSE:EEP[9]).

A world apart from energy MLPs, BlackRock (NYSE:BLK[10]) joined Wisdom Tree in dealing with emerging-market corporate debt, launching the iShares Emerging Markets Corporate Bond Fund (BZX:CEMB[11]) on the BATS BZX Exchange.

CEMB tracks the Morningstar Emerging Markets Corporate Bond Index, which includes corporations in Latin America, Eastern Europe, the Middle East, Africa and Asia (ex-Japan). Individual securities must have a minimum outstanding face value of $500 million or more, and issuers must have aggregate outstanding debt of $1 billion or more. Bonds must be fixed-rate and have remaining maturity of 13 or more months at time of rebalancing, and a minimum of 36 months to maturity at time of issuance.

CEMB will compete with the Wisdom Tree Emerging Markets Corporate Bond Fund (NASDAQ:EMCB[12]), which launched last month[13]. Both funds charge 0.6% in expenses.

Lastly, Royal Bank of Scotland (NYSE:RBS[14]) launched the RBS China Trendpilot ETN (NYSE:TCHI[15]), which uses a systematic “trend-following” strategy to provide exposure to either the BNY Mellon China Select ADR Total Return Index or the yield on a hypothetical notional investment[16] in three-month U.S. Treasurys.

TCHI will determine exposure based on the relative performance of the benchmark BNY Mellon index on a historical simple moving average basis. If the given China equity index closes above its 100-day SMA for three straight days, TCHI will track the return of the said index. If the index closes below the 100-day SMA for three straight days (thus signaling a downtrend), TCHI will switch exposure to Treasurys.

All in all, 95 new funds have been launched this year, according to XTF.com, though just 10 so far in April. The previous week’s offerings included a “Fallen Angel” bond ETF and an agricultural commodity fund.[17]

Kyle Woodley[18] is the assistant editor of InvestorPlace.com[19]. As of this writing, he did not hold a position in any of the aforementioned securities. Follow him on Twitter at @KyleWoodley[20].

Endnotes:
  1. MLPA: http://studio-5.financialcontent.com/investplace/quote?Symbol=MLPA
  2. AMLP: http://studio-5.financialcontent.com/investplace/quote?Symbol=AMLP
  3. YMLP: http://studio-5.financialcontent.com/investplace/quote?Symbol=YMLP
  4. MMP: http://studio-5.financialcontent.com/investplace/quote?Symbol=MMP
  5. PAA: http://studio-5.financialcontent.com/investplace/quote?Symbol=PAA
  6. BPL: http://studio-5.financialcontent.com/investplace/quote?Symbol=BPL
  7. EPD: http://studio-5.financialcontent.com/investplace/quote?Symbol=EPD
  8. ETP: http://studio-5.financialcontent.com/investplace/quote?Symbol=ETP
  9. EEP: http://studio-5.financialcontent.com/investplace/quote?Symbol=EEP
  10. BLK: http://studio-5.financialcontent.com/investplace/quote?Symbol=BLK
  11. CEMB: http://studio-5.financialcontent.com/investplace/quote?Symbol=CEMB
  12. EMCB: http://studio-5.financialcontent.com/investplace/quote?Symbol=EMCB
  13. launched last month: http://investorplace.com/2012/03/new-etf-wisdom-tree-emerging-markets-corporate-bond-fund-emcb/
  14. RBS: http://studio-5.financialcontent.com/investplace/quote?Symbol=RBS
  15. TCHI: http://studio-5.financialcontent.com/investplace/quote?Symbol=TCHI
  16. investment: http://etfdailynews.com/2012/04/19/rbs-china-trendpilot-etn-and-global-x-mlp-etf-debut-tchi-mlpa/
  17. a “Fallen Angel” bond ETF and an agricultural commodity fund.: http://investorplace.com/2012/04/2-new-etfs-track-angels-and-aggies/
  18. Kyle Woodley: http://investorplace.com/author/kyle-woodley/
  19. InvestorPlace.com: http://investorplace.com/
  20. @KyleWoodley: https://twitter.com/#%21/kylewoodley

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