ETF Securities launches US energy Master Limited Partnership ETF

ETF Securities has launched ETFS US Energy Infrastructure MLP GO UCITS ETF on the London Stock Exchange and Deutsche Boerse (Xetra). The fund is the first European listed Master Limited Partnership (MLP) ETF that solely invests in MLPs defined as Infrastructure MLPs.…

Sign up for our weekly Newsletter and receive the latest ETF and ETC news. Click here to register for your free copy

MLPs are usually considered to be those publicly traded partnerships (PTPs) that have active operations predominantly in the energy industry. MLPs can be subdivided into two main groups: Commodity MLPs and Infrastructure MLPs . Infrastructure MLPs are crucial players in US energy infrastructure and derive the majority of their revenue from toll-road like businesses. Infrastructure MLP assets typically include refined products pipelines and terminals, natural gas pipelines, crude oil pipelines and gathering and processing assets.

Historically, infrastructure MLPs have outperformed commodity MLPs on both an absolute and risk-adjusted basis due to their more stable toll-road business models.  The returns of infrastructure MLPs are relatively uncorrelated to commodity-price movements or fluctuations in the economic cycle, as they do not take ownership of the commodity being moved.

It is estimated that almost 32 thousand miles of pipelines are set to be added to the oil and natural gas liquids network by 2035 as production from shale sources continue to increase. In order to support this growth it is expected that a total of US$250bn will be spent to upgrade midstream energy infrastructure.

ETFS US Energy Infrastructure MLP GO UCITS ETF is the first MLP ETF to track the Solactive US Energy Infrastructure MLP Index TR, which has outperformed its peers over the past 5 years .

Commenting on the launch, Matt Johnson, Head of Distribution EMEA at ETF Securities said:

“US energy infrastructure is a very high growth area, and with European listed exposures to the sector still limited, we believe that our MLP ETF offers new opportunities for those interested in gaining access to the returns generated by energy infrastructure in the US. We are offering the first European listed MLP ETF with pure exposure to Infrastructure MLPs. We believe that the growth of the industry, the favourable tax treatment of the underlying assets, and competitive pricing will appeal to European investors in the same way it has to investors in the US.”

The ETFS US Energy Infrastructure GO UCITS MLP sits on CANVAS, a bespoke service launched by ETF securities last September, where asset managers can build and launch their own ETFs.

Product information

Source: ETFWorld.co.uk