UBS Launches Inverse MLP ETN
Source: Seeking Alpha, Michael Johnston (9/29/10)
"Most inverse ETFs available to U.S. investors reset exposure daily."
The index to which MLPS will be linked is already used by two existing MLP products, including the E-TRACS Alerian MLP Infrastructure ETN (MLPI) and the recently launched ALPS Alerian MLP ETF (AMLP). The new inverse ETN will be the fourth MLP product from UBS, joining MLPI, the Alerian Natural Gas MLP (MLPG) and 2x Monthly Leveraged Long Alerian MLP Infrastructure (MLPL).
The development of the ETF industry has resulted in a surge of interest in a corner of the domestic energy market that was often overlooked by investors. MLPs generally own and operate assets used in the transport of energy commodities throughout the U.S., such as oil and gas pipelines. The revenues of these entities depend on demand for oil and gas, which tends to exhibit less volatility than energy commodity prices. As such, and because they are treated as pass-through entities for tax purposes, MLPs in the energy infrastructure industry have, historically, delivered impressive distributions on a consistent basis. With interest rates hovering near record lows, and expected to remain there for the foreseeable future, investors have had to get creative in their hunt for current returns. For many, that search has led to MLPs, where yields can approach 7%.