Global X Drafts MLP ETFs

April 18, 2011

 

Global X Funds, the New York-based firm known for its developing market and natural resources funds, is taking steps to market two ETFs that would tap into the world of master limited partnerships by investing in energy infrastructure and natural gas MLPs.

In a filing with the Securities and Exchange Commission, Global X outlined the Global X MLP Infrastructure ETF and the Global X MLP Natural Gas ETF, both of which will replicate Structured Solutions’ Solactive indexes. The filing did not specify tickers or disclose fees, but it did say that both funds might use derivative instruments such as futures, options and swap contracts in their portfolios.

MLPs—partnerships that generate most of their income from the natural resources sector—often pay hefty dividends thanks to their tax treatment, which makes them particularly attractive at a time of near-zero interest rates. And because they make money from fees rather than from the underlying commodities themselves, MLPs are relatively protected from volatility spikes in commodities prices.

Global X is the latest firm to join the quickly growing MLP space. Just last month, New York-based investment bank Morgan Stanley launched the energy-transport-focused Morgan Stanley Cushing MLP High Income Index ETN (NYSEArca: MLPY).

MLPY joined the likes of the JPMorgan Alerian MLP ETN (NYSEArca: AMJ), a couple of UBS E-TRACS ETNs, as well as the Alerian MLP ETF (NYSEArca: AMLP), among others.

 

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