VanEck revamps energy income ETF

Dec 10th, 2019 | By | Category: Equities

VanEck has implemented substantial changes to its MLP ETF including the adoption of a new underlying index and investment mandate, a change of fund name and ticker, and a reduction in the expense ratio from 0.84% to 0.45%.

Ed Lopez, Head of ETF Product with VanEck.

Ed Lopez, Head of ETF Product with VanEck.

Previously known as the VanEck Vectors High Income MLP ETF (YMLP US), the fund has become the VanEck Vectors Energy Income ETF (EINC US).

It has ceased tracking the Solactive High Income MLP Index on December 1st and commenced following the MVIS North America Energy Infrastructure Index.

The new index, which is compiled by MV Index Solutions, VanEck’s in-house indexing division, tracks the performance of the North American energy infrastructure segment.

Eligible companies include midstream companies, including relevant MLPs, that are involved in oil and gas pipelines, storage facilities, and other activities associated with transporting, storing and gathering natural gas, natural gas liquids, crude oil or refined products.

Companies must be listed in the US or Canada, boast a market capitalization greater than $150m, and have average daily trading volume above $1m. They must also generate at least 50% (or 25% for current components) of their revenues from energy infrastructure.

Constituents are weighted by float-adjusted market capitalization subject to a 24% cap on companies classified as partnerships (this allows the fund to avoid cumbersome K-1 tax forms). Reconstitution and rebalancing occur on a semi-annual and quarterly basis respectively.

The fund’s previous index selected its constituents exclusively from a universe of US-listed MLPs.

Ed Lopez, Head of ETF Product with VanEck, said, “We’re very pleased to be announcing these changes, which should better position EINC as an attractive option for investors looking to access the attractive yield potential and growth prospects of the asset class. Given the recent history of industry consolidation and corporate restructurings, the new index provides a current reflection of the high-yielding energy infrastructure universe.”

Thomas Kettner, Managing Director at MV Index Solutions, added, “The MVIS North America Energy Infrastructure Index complements our range of indices in the oil sector which already covers unconventional oil production, oil services, and refining. It also follows the high index quality standards which are applied to all MVIS Indices leading to pure-play exposure and liquid, investable, and well-diversified indices.”

This is not the first time the fund, which debuted in 2012, has undergone changes. In 2015, VanEck assumed control of the fund form Yorkville ETF Advisors, when it was called the Yorkville High Income MLP ETF. It became the Market Vectors High Income MLP ETF before subsequently being rebranded to VanEck Vectors High Income MLP ETF in 2016.

VanEck will no doubt be hoping the fund regains some of the sparkle it displayed in the period 2012-2014 when assets topped out at $340m. Today it has just $34m.

The fund retains its listing on NYSE Arca.

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