Credit Suisse is set to launch the Cushing 30 MLP ETN (MLPN), an exchange-traded note offering exposure to a benchmark composed of 30 companies that hold mid-stream energy infrastructure assets in North America, on Wednesday of this week. MLPN will be linked to the Cushing 30 MLP Index, an equal-weighted benchmark that uses a formula-based proprietary valuation methodology to rank eligible Master Limited Partnerships (MLPs) for inclusion.
MLPs are limited partnership entities with publicly-traded securities that generally own infrastructure assets such as pipelines, storage facilities, and distribution centers. MLPs are taxed as partnerships and not corporations, meaning that they maintain an advantage for certain investors since they do not pay entity level taxes.
MLPN becomes the third exchange-traded product to offer exposure to the MLP sector. In 2009, JPMorgan launched the Alerian MLP Index ETN (AMJ), which has quickly grown to nearly $1 billion in assets. Earlier this month, UBS introduced the Alerian MLP Infrastructure Index ETN (MLPI), a product tracking a more targeted segment of the MLP sector. Investors have embraced exposure to MLPs through the exchange-traded structure in part because the need for K-1s is eliminated, reducing some of the administrative hassles typically associated with an investment in master limited partnerships. Moreover, MLPs generally offer attractive dividend yields, an appealing feature in the current low interest rate environment.
MLPN will overlap somewhat with existing MLP products, as components of the underlying index include Magellan Midstream Partners, ONEOK Partners, and Kinder Morgan Energy Partners. Similar to AMJ and MLPI, the new Credit Suisse MLP ETN will charge an expense ratio of 0.85%. MLPN is the second exchange-traded product from Credit Suisse, joining the Long/Short Liquid Index ETN (CSLS) that was launched in February.
Disclosure: No positions at time of writing.