http://www.infracapmlp.com/about/fund-profile.html - Master limited partnerships (or MLPs) have long been favored by income investors for their high yields and non-correlated returns.

1. The Benefits And Risks Of MLP ETFs

2. › Master limited partnerships (or MLPs) have long been
favored by income investors for their high yields and
non-correlated returns. Most MLPs operate a toll-road
style infrastructure of pipelines, storage facilities, and
transport for the oil and gas industry. Because of their
specific legal structure, they are able to return a high
portion of their earnings to shareholders in the form of
dividends.

3. › While many investors prefer to own publicly traded MLPs
directly, you can also access a basket of these securities
through an exchange-traded fund (ETF). The benefit to
ETF ownership is that you skirt the issue of being labeled
a limited partner for tax purposes to avoid receiving a K-1
at year end. In addition, you are also able to benefit from
the effects of diversification, transparency, and liquidity in
the ETF format.

4. › The largest ETF in this space is the Alerian MLP ETF
(AMLP), which is based on the Alerian MLP Infrastructure
Index. AMLP has over $8.7 billion dedicated to the 20
largest and most liquid master limited partnerships. Top
holdings include: Enterprise Products Partners (EPD),
MarkWest Energy Partners (MWE), and Plains All American
Pipeline (PAA).

5. › Based on the last quarterly distribution and the current
market price, AMLP sports a yield of 7.53%. In addition,
this ETF charges a management fee of 0.85% that is
combined with a 4.58% income tax deferral for a
combined net expense ratio of 5.43%. The income tax
deferral component is how investors in this fund are able
to avoid the K-1 and instead receive 1099 tax reporting.
› Now at one point last year, the yield on AMLP had fallen
below 6% as higher commodity prices supported equity
valuations in this sector. However, the deflationary trend
of oil and natural gas has weighed on MLPs considerably
this year.

6. › This ETF is now below both its short and long-term moving
averages and has continued to degrade since peaking in early
May. Long-term averages are good guideposts for those
looking to more actively manage their portfolios. AMLP
appears intent on re-testing its lows of the year, which will be
a significant technical level to watch.
› Conservative investors in the MLP space may be attracted to
the First Trust North American Energy Infrastructure Fund
(EMLP). This actively managed ETF takes a unique approach
by combining traditional MLP exposure with conventional
utility companies as well. (More actively managed ETFs with
reasonable fees can be found here.) This methodology
broadens the sector exposure and provides a cushioning
effect with the defensive utility allocation. EMLP has
accumulated over $1.1 billion in total assets spread among 69
holdings.

7. › The drawback to the combination of asset classes is reduced
overall yield on the portfolio. EMLP currently yields 3% and
charges a slightly higher expense ratio of 0.95%. However,
that reduced dividend stream is the tradeoff that you assume
for lower overall price volatility.
› Income investors with a more aggressive thirst for yield may
be interested in the Yorkville High Income MLP ETF (YMLP).
This ETF follows the Solactive High Income MLP Index, which
selects some of the highest yielding MLPs in the industry to
create a markedly different portfolio than the Alerian
benchmark. YMLP has a current 30-day SEC yield of 9.88%
and has recently hit new 52-week lows as this industry
grapples with global commodity volatility.

8. › Another popular method of investing in a diversified
basket of MLPs is through an exchange-traded note
(ETN). Rather than owning a basket of securities, ETNs
function as debt instruments that promise to track an
underlying index with intra-day liquidity similar to an ETF.
The JP Morgan Alerian MLP ETN (AMJ) is an ETN that
tracks the same underlying index as AMLP and charges a
similar expense ratio of 0.85 percent. This fund has just
over $5 billion in total assets and provides sophisticated
investors with another vehicle to structure their exposure.

9. The Bottom Line
› While MLP ETFs and ETNs can offer higher than average
yields, the recent price trend is wary of a cautious
stance. Investors considering these funds must do their
due diligence with respect to tax ramifications, fees, and
the underlying asset allocation of the fund. Nevertheless,
these alternative income tools can provide non-
correlated returns and offer income investors a unique
dynamic under favorable conditions.

10. Contact us
› Website :http://www.infracapmlp.com/about/fund-
profile.html
› Address:
› InfraCap MLP ETF
ETFis Series Trust I,6 E. 39th Street,10th Floor
New York, NY 10016
› 212-593-4383
1-888-383-4184 (toll free)
› info@etfis.com