Market Overview

Expect More MLP ETFs To Come To Market

Expect More MLP ETFs To Come To Market

During the go-go days of the Federal Reserve's various incarnations of quantitative easing and prior to the current bear market for oil prices, master limited partnerships (MLPs) and the corresponding exchange-traded products were prized by income investors searching for yield in low-yield world.

However, the theory that MLPs are not intimately correlated to oil prices has been dealt a severe blow. Of the 25 worst-performing non-leveraged ETFs and ETNs over the past 12 months, 11 are MLP funds. Things have gotten so bad for the space that one issuer said earlier last week that it will shutter two leveraged MLP ETNs, one with over $100 million in assets under management.

Related Link: Institutions Will Continue Increasing ETF Usage

Perhaps those with a contrarian streak might think this is the time to embrace MLPs, and ETF issuers with contrarian streaks could think 2016 is the year in which to bring new product to market. That could be the case for independent ETF issuer REX Shares, which said it in a statement out last Thursday that it has signed an agreement with United States Commodity Funds LLC to launch a series of innovative MLP ETFs.

“The new exchange-traded products will seek to provide investors with exposure to investments in securities of MLPs using listed futures contracts on the S&P MLP Index,” according to the statement.

California-based United States Commodity Funds is the issuer behind such well-known commodities ETFs as the United States Oil Fund LP (ETF) (NYSE: USO), United States Brent Oil Fund, LP (NYSE: BNO) and the United States Natural Gas Fund, LP (NYSE: UNG).

Connecticut-based REX “specializes in creating investment vehicles that solve specific access or efficiency challenges in investor portfolios,” according to the statement.

REX Shares developed the first iPath ETN for Barclays and co-founded VelocityShares prior to a role at ETF issuer Global X.

A Few MLP Names

  • Plains All-American Pipeline, L.P. (NYSE: PAA)
  • Kinder Morgan Inc (NYSE: KMI)
  • Magellan Midstream Partners, L.P. (NYSE: MMP)
  • Enterprise Products Partners L.P. (NYSE: EPD)
  • Alerian MLP (NYSE: AMLP)
  • Image Credit: Public Domain

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