Solactive AG has launched the Solactive US Energy Infrastructure MLP Index, which is used as underlying for the ETF Securities new US Energy Infrastructure MLP GO UCITS ETF.
The exchange-traded fund has listed on the London Stock Exchange and Deutsche Borse (Xetra).
A Master Limited Partnership (MLP) is an American company defined as a limited partnership publicly traded on an exchange. To qualify as MLP, a partnership must generate 90 per cent of its revenues or more from ‘qualifying’ sources – mostly related to the production, processing or transportation of oil, natural gas and coal, some real estate enterprises also qualify. MLPs are well-known to combine the tax benefits of a limited partnership (money is taxed at the unit holders’ level) with the liquidity of a publicly traded company.
The index has been designed to track infrastructure MLPs, as opposed to commodity MLPs. Historically, infrastructure MLPs have outperformed commodity MLPs on both absolute and risk-adjusted basis due to their more stable toll-road business models. There are currently 22 ETFs in the US focused on MLPs with a total amount of ca. USD19 billion AUM but none so far in Europe.
Henning Kahre, head of the equity team, Solactive, says: “We already calculate several equity MLP indices and we also launched earlier this year the first index to offer exposure to MLPs via their bonds. There has clearly been a rising interest for MLPs over the past few years and we are enthusiast to support ETF Securities in providing access to this segment of the market to their European clients.”
The index universe is composed of securities structured as infrastructure MLPs listed on a regulated US stock exchange. To be eligible for inclusion in the Index, a stock must have a market capitalization of USD500 million or above, an average daily traded value of USD4 million or above and at least one distribution payout to unit holders at the time of both the current and previous selections. The top 25 entities ranked according to their forward looking distribution yield and distribution stability are included in the Index and weighted equally.
As of the 16 May 2014, there were 25 components in the index, weighted four per cent each, including: Energy Transfer Partners LP, Kinder Morgan Energy Partners LP, Spectra Energy Partners LP and Williams Partners LP.
Published in USD, the index is available in a price return and total return versions.