The Yorkville High Income MLP (YMLP) ETF is an exchange-traded fund that tracks an index called the Solactive High Income MLP Index. The index consists of the MLPs involved in oil exploration and production, natural gas exploration and production, the sale, distribution, and retail marketing of propane and other natural gas liquids, crude oil shipping, dry bulk shipping, refined products transportation, liquefied natural gas shipping, and other marine transportation. The index also tracks companies that engage in direct mining, production, and marketing of natural resources, including timber, fertilizers, coal and other minerals, and royalty trusts.
The Yorkville High Income MLP ETF (YMLP) launched in March 2012. As of April 11, 2014, market capitalizations of the index components ranged from approximately $450 million to approximately $9.3 billion. Major constituents of YMLP include Ferrellgas Partners LP (FGP), Teekay Offshore Partners L.P. (TOO), Teekay LNG Partners L.P. (TGP), Eagle Rock Energy Partners LP (EROC), and Navios Maritime Partners L.P. (NMM).
The last quarterly distribution on the YMLP ETF was $0.41 per share, which at a current price of $17.94 per share (as of April 11, 2014) results in a current yield of ~9.3%.
As of April 11, 2014, YMLP had total assets under management of $282.8 million. On average, 96,573 YMLP ETF units traded daily in the past month. The total annual operating expense is 4.65%, consisting of a management fee of 0.82% and a deferred tax expense of 3.83%.
For federal income tax purposes, YMLP has been structured as a “C-Corp.” So YMLP accrues deferred tax liability for its future tax liability on the capital appreciation of its investments, and the distributions it receives on the equity securities of its constituent MLPs are considered returns of capital. The deferred income tax expense (or benefit) represents an estimate of YMLP’s potential tax expense (or benefit) if it were to recognize the unrealized gains (or losses) in the portfolio. All realized and unrealized gains (or losses) on investments and expenses may vary greatly from year to year and from day to day, depending on the nature of the fund’s investments, the performance of those investments, and general market conditions.
Investors receive a variable quarterly dividend linked to the cash distributions paid on the MLPs in the index, less accrued tracking fees. A portion of each quarterly distribution is treated as a return of capital for tax purposes, while the remaining portion is treated as a qualified dividend.
The largest MLP ETF fund is the Alerian MLP ETF (AMLP), which tracks the Alerian MLP Index, a capitalization-weighted composite of 50 energy MLPs. Other MLP ETFs include the Yorkville High Income MLP (YMLP), the Global X MLP ETF (MLPA), the Yorkville High Income Infrastructure MLP ETF (YMLI), and the Global X MLP & Infrastructure ETF (MLPX). Note that these other MLP ETFs all have significantly smaller market caps than AMLP.