Market Overview

Direxion Eyes MLP ETF

Direxion, the second-largest issuer of inverse and leveraged ETFs, could add to its suite of plain vanilla offerings with the introduction of a new ETF focusing on master limited partnerships.

The firm has filed plans with the Securities and Exchange Commission to possibly introduce the Direxion Zacks High Income MLP Shares.

The filing did not include a ticker for the new fund, but did indicate the expense ratio will be 0.65 percent per year. The Direxion MLP ETF would track the Zacks MLP Index and be passively managed.

Zacks "utilizes multi-factor proprietary selection rules to identify MLPs that may offer the greatest yield by assessing various factors, including yield, liquidity, relative value, and other factors. Each company is then sorted from highest to lowest based on its yield," according to the filing.

Following that screening process, the universe of possible constituents is whittled down to 25 and each receives a weighting of four percent within the index.

As investors have increasingly sought new avenues of yield, MLP ETFs and ETNs have soared in popularity. The largest MLP exchange traded products include Alerian MLP ETF (NYSE: AMLP) an the JPMorgan Alerian MLP Index ETN (NYSE: AMJ). Others include the Global X MLP ETF (NYSE: MLPA), the Yorkville High Income MLP ETF (NYSE: YMLP) and the Yorkville High Income Infrastructure MLP ETF (NYSE: YMLI).

Direxion's lineup of non-leveraged ETFs includes the Direxion NASDAQ-100 Equal-Weight Index Shares (NYSE: QQQE) and the Direxion All-Cap Insider Sentiment Shares (NYSE: KNOW).

For more on ETFs, click here.

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