Oil rig

Global X launches Junior MLP ETF

Global X Funds is to launch the Global X Junior MLP ETF (MLPJ) – the first exchange-traded fund to specifically target the small-cap segment of the master limited partnership market – on the NYSE Arca.

The fund will invests at least 80 per cent of its net assets in the securities of the underlying index – the Solactive Junior MLP Index – and will charge management fees of 0.75 per cent.

As the energy infrastructure in North America continues to expand, smaller capitalisation MLPs often control increasingly important energy assets and are active in the exploration, transportation and storage of domestic energy resources. Because many of these companies are not included in major MLP indices, in many cases they have not experienced the same price growth as their larger counterparts and may offer value at current levels.

According to a 2012 report from the International Energy Association, the US will become the world’s largest oil producer by 2017 and a net exporter of natural gas by 2020. Junior MLPs are poised to benefit from the US energy renaissance, providing critical infrastructure for the exploration and production, transportation and storage of this increase in domestic energy and offering investors a means to access this growth.

Despite a difficult IPO market, four energy-related MLPs have made their IPO debuts in 2012 alone, as the smaller-cap segment of the industry continues to expand.
 

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