The Yorkville High Income MLP ETF
The Yorkville High Income MLP ETF (YMLP) rose 3.7% in the week ended August 14. The broad-market SPDR S&P 500 ETF Trust (SPY) rose 0.7% and the Energy Select Sector SPDR ETF (XLE) rose 3.4% during the week. YMLP tracks the Solactive High Income MLP Index, also called the YMLP index. The index rose 4.2% in the week. The Alerian MLP Infrastructure Index (AMZI) rose 5.3%.
YMLP has a management fee of 0.82% and total net assets of $186 million. Navios Maritime Partners (NMM), Calumet Specialty Products Partners (CLMT), Seadrill Partners (SDLP), NGL Energy Partners (NGL), and Exterran Partners (EXLP) are the ETF’s top five holdings. Together, these five MLPs account for ~31% of YMLP.
The average company size by market capitalization in YMLP’s portfolio is $1.3 billion. The portfolio’s holdings range from $530 million to $3.2 billion in market capitalization. In comparison, the Alerian MLP ETF (AMLP) portfolio’s average company size by market capitalization is $12 billion. Smaller-cap MLPs are generally considered to be riskier than large-cap ones. YMLP currently trades at a 16.2% yield compared to AMLP’s 7.5% yield. Investors expect higher yields to compensate for higher risks.
YMLP’s portfolio is diverse. Of the MLPs in YMLP, 30% are involved in marine transportation, 25% provide energy services, and 20% are exploration and production MLPs. Downstream MLPs account for 17% of YMLP’s holdings.
The above graph compares YMLP’s weekly returns with those of its underlying index (the YMLP index), SPY, and XLE. All of these returns include dividends.
The YMLP index
The Solactive High Income MLP Index is a rules-based index focused on high distribution–paying, publicly traded MLPs. The index’s constituents are selected based on certain criteria relating to current distributions, coverage ratio, and historical distribution growth. The index currently consists of 25 MLP stocks.