ETFS launches first infrastructure Master Limited Partnership for Europeans
ETF Securities has listed its ETFS US Energy Infrastructure MLP GO Ucits ETF on the London Stock Exchange and Deutsche Boerse, in what it says is a first for the European ETF market.
The fund is a Master Limited Partnership that invests in MLPs defined as infrastructure MLPs – these are considered to be publicly traded partnerships with operations predominantly in the energy industry, ETFS said.
The other type of MLP invests in commodities.
Infrastructure MLPs play an important role in the US energy infrastructure market, effectively ensuring investment goes into assets such as refined oil pipelines and terminals, natural gas pipelines, and crude oil pipelines.
ETFS said that historically infrastructure MLPs outperform commodity MLPs on an absolute and risk adjusted basis. Returns of infrastructure related MLPs are relatively uncorrelated to commodity price movements or economic cycles, and do not own the commodities flowing through the infrastructure.
ETFS added: “It is estimated that almost 32,000 miles of pipelines are set to be added to the oil and natural gas liquids network by 2035 as production from shale sources continue to increase. In order to support this growth it is expected that a total of $250bn will be spent to upgrade midstream energy infrastructure.”
The new ETF fund tracks the Solactive US Energy Infrastructure MLP Index TR.
Matt Johnson, head of Distribution EMEA at ETF Securities said: “US energy infrastructure is a very high growth area, and with European listed exposures to the sector still limited, we believe that our MLP ETF offers new opportunities for those interested in gaining access to the returns generated by energy infrastructure in the US. We are offering the first European listed MLP ETF with pure exposure to Infrastructure MLPs. We believe that the growth of the industry, the favourable tax treatment of the underlying assets, and competitive pricing will appeal to European investors in the same way it has to investors in the US.”