ETF Showdown: Master Of The MLP Universe
In case you didn't already know, master limited partnerships (MLPs) have been simply en fuego as an asset class in recent years. And what's not to like? As we recently noted, stellar performance, robust yields and tax advantages make it impossible to ignore MLPs.
The rising popularity of MLPs has spawned another increase: More exchange-traded products offering exposure to the high-yielding stocks. For a while, the only game in town when it came to MLP ETFs wasn't an ETF at all, it was an ETN as in the JPMorgan Alerian MLP Index ETN (NYSE: AMJ).
Well the soaring popularity of MLPs has led to some competition for the JPMorgan Alerian MLP Index ETN and we're going to take a look at two of those funds today: The ALPS Alerian MLP ETF (NYSE: AMLP) and the Credit Suisse Cushing 30 MLP Index ETN (NYSE: MLPN).
Both ETFs have expense ratios of 0.85%, so we know that won't determine a winner here. We're going to have dig deeper.
Home to 25 stocks, the ALPS Alerian MLP ETF has a top-10 roster that reads like a who's who of the MLP universe. Kinder Morgan Energy Partners (NYSE: KMP), Enterprise Products Partners (NYSE: EPD) and Magellan Midstream Partners (NYSE: MMP) are the ETF's top-three holdings. Other top holdings include Oneok (NYSE: OKS) and Williams Partners (NYSE: WPZ).
MLPN is home to more stocks (30 to be precise) and no single holding receives a weight of over 3.45%. On the other hand, Kinder Morgan and Enterprise Products account for more than 19% of AMLP's weight by themselves.
So on the basis of diversity, the Credit Suisse offering look superior and it looks like investors have taken note of that fact as the ETF has almost $224 million in assets under management and 20-day average volume of over 106,000 shares.
By those metrics though, AMLP is the winner with over $1.7 billion in AUM and average volume of nearly 1.1 million.
Both ETFs are up about 1.2% year-to-date, but the performance edge would go to AMLP with a higher yield at 6.26% compared to 5.42% for MLPN. For real time trading ideas go here.
On that basis, we'll declare AMLP the winner, but that being said, MLPN is a solid fund in its own right, especially when considering it's less than two years old and has already achieved a solid position in a competitive market niche.
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