The Contenders
In addition to the aforementioned JPMorgan ETN, there is an actual Alerian MLP ETF ALPS, which holds the stocks in the index. The Cushing 30 MLP Index ETN (MLPN) replicates a different index and is backed by Credit Suisse, while the Yorkville High Income MLP ETF (YMLP) targets a wider, if riskier, set of MLPs in the search for higher yields. The E-Tracs 2x Leveraged Long Alerian MLP Index ETF (MLPL) uses that underlying Alerian index but adds leverage to magnify the returns.
People’s Choice
The JPMorgan Alerian ETN (AMJ) and the Alerian MLP ETF (ALPS) are far and away the largest players in the market––the third-largest fund is one-tenth the size of Alerian MLP ETF. Volume is likewise strong for the two largest instruments, though the six largest funds all have adequate volume for most investors’ needs [see 101 High Yield ETFs For Every Dividend Investor].
As a reminder, these are relatively new offerings, with the oldest being only about two years old.
Expense Considerations
Although the net asset value of the two largest funds is pretty respectable, these are relatively expensive ETFs and ETNs. Five of the six largest funds have expense ratios of 0.85%, with the sixth charging 0.82%.
Different Options
With 25 stocks in the Alerian MLP Index and 30 in the Cushing 30 Index, these are somewhat concentrated funds and notes by the standards of the broader market.
Investors considering MLP-based ETFs and ETNs can consider a couple of closed-end funds. While closed-end funds have gone out of vogue with the rise of ETFs, they still have certain advantages including potentially superior (or inferior) performance from active management. Tortoise Capital Advisors offers a number of closed-end funds, including the Tortoise Energy Capital Corp (TYY). Kayne Anderson also offers closed-end alternatives, including the Kayne Anderson MLP Investment Company (KYN)