Citigroup Launches Miller/Howard Fundamental MLP ETN (MLPC)

by on September 27, 2013 | ETFs Mentioned:

Bullish momentum has cooled off a bit this week on Wall Street following the massive rally seen in response to the Federal Reserve delaying the much-feared “taper.” As such, with interest rates expected to remain suppressed in the foreseeable future, ETF issuers have once again started to ramp up activity on the product development front, more specifically focusing on developing solutions for yield-starved investors [see 101 High Yielding ETFs For Every Dividend Investor].

Guggenheim expanded its suite of high yield corporate bond funds with the launch of BSJJ and BSJK earlier this week. Citigroup was next on the list, with its debut of an MLP ETN based on the Miller/Howard Fundamental Index (MLPC) this Thursday.

MLPC: Where MLPs and Fundamentals MeetMLP ETPs

The new ETN from Citigroup is based on the performance of the Miller/Howard MLP Fundamental Index; this benchmark is comprised of 25 energy master limited partnerships (MLPs) selected on a quarterly basis based on a methodology that reviews certain quantitative factors, including distribution growth, capital expenditures, and distribution coverage [see Energy Bull ETFdb Portfolio].

MLPC joins the increasingly popular MLPs ETFdb Category, which is comprised of over a dozen offerings with an average expense ratio of 0.80%. The new ETN from Citigroup is sure to face some stiff competition from more established players in the space, which offer nearly identical exposure, including:

  • Alerian MLP ETF (AMLP, A-with nearly $7 billion assets under management
  • JP Morgan Alerican MLP Index ETN (AMJ, Bwith over $5.5 billion in AUM


In addition to Citigroup’s launch, T. Rowe Price has filed regulatory paperwork with the SEC for permission to market a diverse array of “nontransparent” ETFs. The logic behind these “nontransparent” funds is that investors will be able to easily tap into the company’s investment management expertise, while at the same time T. Rowe can protect its current mutual fund shareholders that could be negatively impacted by an ETF’s daily disclosure. T. Rowe had already sought permission in 2009, but its updated filing seems to expand on its original request, allowing the company to follow essentially any investment strategy [see The Complete History of the Dow Jones Industrial Average]. 

The USAA, a financial services company set up for the U.S. armed forces and State Department personnel and their families, also updated its filing, revealing that it plans to launch 14 new exchange traded funds:

  • Cornerstone Moderately Aggressive Fund
  • Dividend Equity Fund
  • Flexible Income Fund
  • Global Managed Volatility Fund
  • High Income Fund
  • Intermediate Term Bond Fund
  • Precious Metals and Natural Resources Fund
  • Real Return Fund
  • Short-Term Bond Fund
  • Tax Exempt Intermediate-Term Fund
  • Tax Exempt Long-Term Fund
  • Tax Exempt Short-Term Fund
  • Total Return Strategy Fund
  • Ultra Short Term Bond Fund

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Disclosure: No positions at time of writing.

Cornerstone Moderately Aggressive Fund