UBS has listed on the NYSE Arca a leveraged version of the ETRACS Wells Fargo MLP Ex-Energy ETN which debuted earlier this month.
The ETRACS Monthly Pay 2xLeveraged Wells Fargo MLP Ex-Energy ETN (LMLP), which adds leverage to an already unique strategy, and its delta one predecessor the ETRACS Wells Fargo MLP Ex-Energy ETN (MLP), mark a turning point for the ETF world, as they are the first products to focus on MLPs while excluding the energy sector.
Traditionally MLPs are closely linked to energy, as a number of oil and gas companies use this structure, but UBS is exploring options beyond the energy world that use the MLP style with the first two products with exposure to MLPs that exclusively operate outside of the energy industry.
Christopher Yeagley, head of ETRACS at UBS in New York, said that investors have increasingly focused on MLPs as an asset class. “We are pleased to offer investors the opportunity to obtain 2x leveraged exposure to the Wells Fargo Master Limited Partnership Ex-Energy Index,” he said. “We expect LMLP to provide significant income potential.”
The fund’s 2X leverage structure offers a potential yield of 15.24% which makes it one of the highest yielding ETFs in the market.
The ETRACS Wells Fargo MLP Ex-Energy ETN offers a yield in excess of 7%. The Index yield is calculated by the sponsor of the Index, Wells Fargo Securities