Global X Launches Cheapest MLP ETF Yet (MLPX)

by on August 8, 2013 | ETFs Mentioned:

The bears are back on Wall Street as recent commentary from several Fed officials has served to remind investors that policymakers are preparing to scale back on stimulus as soon as this September. While a reduction in bond-repurchases should be seen as confirmation of the domestic recovery moving on track, investors are still worried about meaningful economic growth, especially after last Friday’s lackluster employment report [see Want A Simple, 3-ETF Portfolio? Here Are 25 Of Them].

Nonetheless, the bulls remain very much in the driver’s seat and the product development front has remained very active throughout the summer months. Global X expanded its lineup of niche strategies with the launch of the cheapest MLP exchange-traded fund yet: the MLP & Energy Infrastructure ETF (MLPX).

MLPX Takes the Lead in Race to Rock-Bottom Fees

The new ETF expands the firm’s reach in the MLP space, which continues to hold tremendous appeal among yield-hungry investors. MLPX boasts the reputation as the cheapest offering in the MLPs ETFdb Category, featuring a price tag of 0.45% compared to the category average of 0.80%. Global X ‘s MLPA also sports a 0.45% expense fee, although there is an important distinction that must be made here [see The Cheapest ETF For Every Investment Objective].

The new MLPX  features a total cost of 0.45% and is structured under the Investment Company Act of 1940, and as such, only about a quarter of its total holdings are actually master limited partnerships; the majority are corporations that operate in the energy infrastructure industry. By comparison, the Global X MLP ETF (MLPA, A-) is structured as a C-Corp., and ends up costing more than advertised because of corporate taxes that are common in MLP ETFs. Again, the distinguishing feature here is that MLPA is comprised entirely of MLPs, whereas MLPX is a blend of actual corporations and some master limited partnerships [see Energy Bull ETFdb Portfolio].

From a portfolio composition perspective, MLPX holds 35 securities in the midstream energy infrastructure industry, featuring allocations to well-known bellwethers including: Enbridge Inc. (ENB), Transcanada Corp. (TRP), and Kinder Morgan (KMI).

Meet the Competition

MLPX may boast the reputation as the “cheapest,” but it will still face very stiff competition from some of the “biggest” players in the MLP space, including:

  • Alerian MLP ETF (AMLP, B+with $6.7 billion in assets under management
  • JP Morgan Alerian MLP Index ETN (AMJ, A-with $5.9 billion in AUM
  • UBS E-TRACS Alerian MLP Infrastructure Index (MLPI, Awith $1.2 billion in AUM

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Disclosure: No positions at time of writing.