MLP ETF Showdown – AMLP, YMLP, MLPN

| June 26, 2013 | 0 Comments

MLP ETFsIn today’s ETF showdown, we’re taking a closer look at MLP ETFs.

As you know, ETF providers like iShares, State Street, ProShares, and many others offer ETFs that sound similar.  But just because they have a similar name doesn’t mean they’ll have the same performance.

When your hard-earned money is on the line, selecting the right ETFs is crucial to maximizing your profits and minimizing your losses. 

So let’s take a closer look at three popular MLP ETFs.

MLP is short for Master Limited Partnership.  They’re essentially a limited partnership that is publicly traded.  Investors are limited partners that provide capital to the MLP and in return they receive periodic distributions from the MLP’s cash flow.

In order to qualify as an MLP, the partnership must make around 90% of its cash flow from real estate, natural resources, and commodities.

The primary benefit of being an MLP is preferential tax treatment.  As a partnership, they avoid paying corporate income tax on the income they distribute to the partners. 

MLPs have become popular investments because of their high cash payouts.  As a result, many ETFs focused on MLPs have sprung up in the last few years.

These ETFs typically focus on energy infrastructure MLPs.  These MLPs own oil and natural gas pipelines, storage tanks, and other infrastructure essential to the energy industry.

Let’s start with the most popular MLP ETF.  The Alerian MLP ETF (AMLP) from ALPS has a massive $6.2 billion in AUM (Assets Under Management).

So far this year AMLP is up 12.3% and it has gained 17.8% over the last year.  It also sports an expense ratio of 0.85% and a dividend yield of 4.56%.

AMLP tracks the Alerian MLP Infrastructure Index.  This index is designed to give investors exposure to MLPs in energy infrastructure.  In order to be considered for this index, the MLP must earn 50% or more from assets not directly impacted by commodity prices. 

Next let’s look at the MLP ETF with the highest dividend yield.  The Yorkville High Income MLP ETF (YMLP) has attracted a little over $200 million in AUM.

So far this year YMLP is up 9.8% and it has gained 13.2% over the last year.  It also sports an expense ratio of 0.82% and a dividend yield of 9.02%.

YMLP tracks the Solactive High Income MLP Index.  This index is made up of a wide range of MLPs.  Some of them are involved in oil exploration & production, natural gas exploration & production. 

It also includes companies that sell, distribute, and market propane, timber, fertilizers, coal, and other minerals.  It even includes shipping companies that transport natural resources.  The final component of this index is royalty trusts… they typically own the rights to royalties on the production and sales of a natural resource, including oil, gas, minerals and timber.

Last but not least is the MLP ETF with the biggest year-to-date gains.  The Cushing 30 MLP Index ETN (MLPN) has attracted $513 million in AUM.

So far this year MLPN is up 21.6% and it has gained 34.37% over the last year.  It also sports an expense ratio of 0.85% and a dividend yield of 4.78%.

MLPN tracks the Cushing 30 MLP Index.  This index is an equal weighted index.  It holds mid-stream energy infrastructure assets in North America.  The 30 MLPs that are included are chosen based on a methodology of ranking ETFs developed by Swank Energy Income Advisors. 

Here’s the bottom line…

As you can see, AMLP, YMLP, and MLPN all offer a different twist on MLP investing.  YMLP delivers huge payouts while MLPN has the best performance.  And by digging into the index, you can find out which one is best suited for you. 

Good Investing,

Corey Williams

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Category: ETFs, Sector ETFs

About the Author ()

Corey Williams is the editor of Sector ETF Trader, an investment advisory service focused on profiting from ETFs and the economic cycle. Under Corey’s leadership, the Sector ETF Trader has become one of the most popular and successful ETF advisories around. In addition to his groundbreaking service, Corey is the lead contributor to ETF Trading Research, where he shares his insights about ETFs and financial markets three times a week. He’s also a regular contributor to the Dynamic Wealth Report and the editor of one the hottest option trading services around – Elite Option Trader.

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