New Fund/ETF Structure Launched to Track MLPs (IMLP, AMJ, AMLP, KYN)

Energy

Published: January 4, 2013 10:58 am

Last Updated: April 28, 2020 2:33 am

There is a new exchange-traded product in the world of Master Limited Partnerships (MLPs). We would caution investors that this is an exchange traded note rather than an exchange traded fund. Today’s launch of the iPath S&P MLP ETN (NYSEMKT: IMLP) provides investors with exposure to the MLP market, offering exposure to the performance of the consolidated volume-weighted average price level of the S&P MLP Index.

With this being a note, investors need to know that they are effectively getting a derivative of the index rather than owning 100% of the assets in the underlying stocks (actually units) of each underlying MLP. Here is the forma description of the structure:

iPath ETNs are senior, unsecured, unsubordinated debt securities issued by Barclays Bank PLC. Barclays Bank PLC is the issuer of iPath ETNs and Barclays Capital Inc. is the issuer’s agent. BlackRock’s broker dealer affiliate, BlackRock Investments, LLC, assists in the promotion of the iPath ETNs.

The aim of this ETN is to offer the potential for income along with upside appreciation “via index-linked exposure to US energy infrastructure-focused partnerships” tracking the S&P MLP Index. The S&P MLP Index includes both master limited partnerships and publicly traded limited liability companies (LLCs) which have a similar legal structure to MLPs and share the same tax benefits as MLPs.

Another note of caution will need to be made here. Volume is likely to be thin as the initial launch is only 1 million units outstanding at the standard $25.00 launch price. The ETN was also designed to pay a quarterly coupon. More data can be found at the iPathETN.com website.

Today’s launch only highlights our other ETF and funds tracking MLPs and similar structures…

We track ETFs and Funds tied to the MLP sector. JPMorgan Alerian MLP Index ETN (NYSEMKT: AMJ) trades more 1 million shares per day and the lower-priced ALPS Alerian MLP ETF (NYSEMKT: AMLP) trades about 2.3 million shares per day. Kayne Anderson MLP Investment Company (NYSE: KYN) is our go-to closed-end fund which tracks MLPs but we would note that there is some leverage to this fund.

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