Global X Funds has launched a new exchange-traded fund offering access to master limited partnerships, which the firm says charges roughly half other ETF providers charge in this invest category.
The fund, called Global X MLP ETF (MLPA), offers exposure to the Solactive MLP Composite Index, which is designed to be a MLP benchmark index for energy and resource master limited partnerships. As of April 17, 2012, the index consisted of 30 MLPs and the three largest components of the index were Energy Transfer Partners, Enterprise Products Partners, and Plains All American Pipeline.
"The Global X MLP ETF provides cost effective access to the MLP sector with a much lower fee than the industry average," Bruno del Ama, chief executive officer of Global X Funds and manager of the fund, told Money Management Executive.
The key innovation, said del Ama, is the price. The fund charges 45 basis points for its management fee, compared to the MLP ETF and exchange-traded note average, which he said is 85 bps.
“There are other funds that offer similar kinds of coverage in this investment space, but they are very expensive,” he said.
Other important advantages of the fund, del Ama said, include the low correlation between MLPs and equities and the high yields paid by these kinds of partnerships.