ALPS Files To Compete With EMLP, MLPX

August 08, 2013

The sponsor behind AMLP wants to get a piece of a new pocket of MLP investing.

ALPS, the issuer of the biggest master limited partnership exchange-traded fund in the world, filed regulatory paperwork detailing an MLP-related energy infrastructure fund that’s similar to one launched this week by Global X, which steers clear of complex tax issues linked to MLP ETFs.

The proposed fund, the Alerian Energy Infrastructure ETF, is also similar to the $433 million First Trust North American Energy Infrastructure Fund (NYSEArca: EMLP), a pioneering fund that at the time of its launch represented a new way to access yield-rich MLPs in an ETF wrapper.

All of these newfangled funds—EMLP; the Global X MLP & Energy Infrastructure ETF (NYSEArca: MLPX); and the proposed ALPS fund—will steer clear of the deferred tax characteristics associated with MLP ETFs by owning no more than 25 percent of actual master limited partnerships.

The new ALPS fund will be benchmarked against the Alerian Energy Infrastructure Index, which comprises 30 equity securities of issuers headquartered or incorporated in the United States and Canada. Its portfolio manager is Michael Akins, director of index management and product oversight at ALPS Advisors.

ALPS didn’t disclose in the filing how much its proposed Alerian Energy Infrastructure ETF will cost or what its ticker will be.

Price could be important in this new pocket of MLP-related investing, as Global X has signaled it will compete on price.

Global X’s new MLPX has an annual management fee of 45 basis points, or $45 for each $10,000 invested—less than half the cost of First Trust’s competing fund EMLP.

ALPS is the sponsor behind the $6.8 billion Alerian MLP ETF (NYSEArca: AMLP). It has an annual expense ratio of 0.85 percent, but after accounting for the deferred taxes issue, the all-in cost rises to around 4.85 percent.

About two years ago, ALPS filed to offer the Alerian Plus MLP Infrastructure ETF, a fund ostensibly designed to minimize tracking error that funds like its AMLP exhibit. That fund, should it ever launch, will be benchmarked against the Alerian Natural Gas MLP Index.

 

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