European access to the US energy boom though infrastructure has become wider via the exchange-traded fund (ETF) route.ETF Securities has launched the first European-listed master limited partnership (MLP) ETF that solely invests in infrastructure MLPs, the provider says.
The ETFS US Energy Infrastructure MLP GO UCITS ETF is listed on the London Stock Exchange and Deutsche Boerse.
MLPs are usually considered to be those publicly traded partnerships that have active operations predominantly in the energy industry. There are two types: commodity MLPs and infrastructure MLPs.
Infrastructure MLPs are “crucial” players in US energy infrastructure and derive the majority of their revenues from “toll-road” like businesses, says ETF Securities. Infrastructure MLP assets typically include natural gas pipelines, crude oil pipelines and gathering and processing plant.
Historically, infrastructure MLPs have outperformed commodity MLPs on both an absolute and risk-adjusted basis due to their more stable toll-road business models, the provider says.
ETF Securities says it is estimated that almost 32 thousand miles of pipelines are set to be added to the oil and natural gas liquids network by 2035 as production from shale sources continue to increase. Billions of dollars will be spent to upgrade midstream energy infrastructure.
Matt Johnson, head of distribution in Europe, Middle East and Africa at ETF Securities says: “US energy infrastructure is a very high growth area, and with European listed exposures to the sector still limited, we believe that our MLP ETF offers new opportunities for those interested in gaining access to the returns generated by energy infrastructure in the US.”
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