One of the reasons for Magellan Midstream Partners’ relatively lower distribution yield might be its strong distribution coverage ratio. At well above 1x, MMP is relatively less risky.
The ETRACS Alerian MLP Infrastructure Index ETN (MLPI) fell 9.7% in the week ended August 7. The ETN closely tracks the Alerian MLP Infrastructure Index/
Leveraged ETFs seek to provide a certain multiple (generally 2x or 3x) of daily returns on the underlying index. The daily movements in the underlying index and subsequent changes in ETF exposure may mean the ETF manager needs to rebalance the portfolio daily.
