Yorkville ETF Advisers LLC soon will have no exchange-traded funds to advise on with Monday’s announcement it has entered into an asset purchase agreement to sell its two funds to Van Eck Global.
As part of the agreement reached between Van Eck and two parties, Yorkville and Exchange Traded Concepts LLC, the Yorkville High Income MLP ETF (YMLP) and the Yorkville High Income Infrastructure MLP ETF (YMLI) will be acquired by Van Eck for an undisclosed amount and reorganized as Market Vectors ETFs. The funds’ ticker symbols, underlying indexes, performance history, net assets and existing management fees are expected remain the same in their new incarnation as the Market Vectors High Income MLP ETF and the Market Vectors High Income Infrastructure MLP ETF.
The deal is pending approvals from shareholders of the two funds and the board of directors of the Market Vectors ETF Trust and Exchange Traded Concepts Trust. Van Eck expects to begin the reorganization process later this quarter and to complete the transition in the fourth quarter.
Exchange Traded Concepts is an Edmond, Okla.-based company whose turnkey platform helps bring ETFs to market more quickly and less costly than doing it from scratch. It helped bring to market the YMLP and YMLI funds which launched in March 2012 and February 2013, respectively.
Yorkville couldn’t be reached for comment as to why it’s selling the funds. Garrett Stevens, CEO of Exchange Traded Concepts, wouldn’t speak directly about the deal because he says they’re in a quiet period due to the SEC filings made as part of the reorganization. But he did give some clues about Yorkville’s rationale.
“One of the reasons why people choose to use our platform is so they can create a series of ETFs, grow them and have the opportunity to sell them to a larger ETF provider,” he says. “Several of our clients have that intention.”
MLPs, or master limited partnerships, are publicly traded entities that must get 90% of their revenue from qualified activities including energy and other commodities. Many energy-focused MLPs are centered on oil and gas pipelines and storage facilities––i.e., the midstream part of the production chain. These are stable businesses, and they tend to pay sizable dividends.
The Yorkville High Income MLP ETF sports a SEC 30-day yield of 11.10 percent, while the Yorkville High Income Infrastructure MLP ETF carries a yield of 5.66 percent. Both funds have taken a dive during the energy sector’s year-long swoon––the former is off 53 percent from its 52-week high; the latter is down 24 percent from its high.
But both funds have attracted healthy inflows, with the High Income fund garnering $226 million in assets versus $55 million for the High Income Infrastructure fund.
“Van Eck has a long history in energy- and commodities-based investing,” says Brandon Rakszawski, product manager at Van Eck Global. “This presented us an opportunity to provide MLP exposure to our existing client base and shareholders of all levels.”