Daily ETF Watch: Van Eck Acquiring MLP ETFs

August 03, 2015

Van Eck will be acquiring the Yorkville MLP ETFs from Exchange Traded Concepts and Yorkville ETF Advisers, according to a recent press release. The unusual transaction will see the Yorkville High Income Infrastructure MLP ETF (YMLI) and the Yorkville High Income MLP ETF (YMLP) adopt the Market Vectors brand name and join Van Eck’s ETF lineup.

The funds are both expected to keep the same underlying indexes from Solactive and their trading symbols. There was no mention made of expense ratios in the press release, and the filing from Market Vectors does not include that information.

Van Eck says that although ETF providers occasionally do acquire each other, the acquisition of two funds is the first of its kind. However, it is remarkably similar to when the company acquired the Merrill Lynch-sponsored HOLDRs and converted them into normal ETFs in 2011.

While YMLP has roughly $200 million in assets under management, YMLI has less than $55 million. The acquisition brings two reasonably successful pure MLP ETFs into the Market Vectors family.

“The attractive yield characteristics of MLPs make these ETFs a natural extension of our focus on income-oriented investing,” Van Eck Global CEO Jan van Eck noted.

The funds also expand Market Vectors lineup of energy-oriented funds, filling a noticeable hole. Currently, Van Eck offers six energy-oriented ETFs, from its Market Vectors Uranium+Nuclear Energy ETF (NLR | D-20) to its Market Vectors Oil Services ETF (OIH | A-47). The absence of an MLP-focused fund was almost glaring given the wave of such products that has swept the ETF space in recent years.

Van Eck said the transition is expected to begin in the third quarter and finalize in the fourth quarter.

FactorShares Plans Funds

The most recent filings for two very different new funds made under the FactorShares exemptive relief are a bit of a mystery. The filings cover a Retail Franchise ETF and a Latin America Real Estate ETF, but there’s no brand preceding the fund names.

FactorShares has not existed as a brand name in terms of listed ETFs since the closure of the funds going by that name in 2013. However, the firm’s exemptive relief has been used to launch the PureFunds family of ETFs, with Factor Advisors serving as the investment advisor to the funds. Penserra Capital Management has served as subadvisor to most of the PureFunds ETFs.

Both Penserra and Factor Advisors are included in the two newest filings, so it appears that the funds will be affiliated with the PureFunds ETFs even if they don’t carry the same brand name. But the niche nature of the filings suggests they would fit well under the PureFunds umbrella.

Funds' Focuses

The Retail Franchise ETF will have a global focus but will invest only in U.S.-listed securities, including American depositary receipts. Components must have a retail focus, such as operating convenience stores, gas stations, hotels or restaurants. The equally weighted index has no set component count and will include all securities meeting its business activity, size, volume and domicile requirements. Currently, there are no similar ETFs trading.

The Latin America Real Estate ETF also stands on its own. The fund will invest in securities of companies that generate most of their revenue from real-estate-related activities in Latin America, including REITS or their local equivalents as well as real estate developers, companies that own income-producing real estate assets, and companies that provide services to real estate or infrastructure developments, according to the prospectus.

Components must meet investability, size and liquidity requirements, and are weighted in the index based on a combination of market cap, liquidity and yield.

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