IT HAS ARRIVED!
We have been waiting for it but now we have an exchange traded note on the mlp index! Glory! So if you can't decide what mlp to buy...buy them all!
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About Me
- joewxman
- a meteorologist with a knack for trading and investing in MLPS! I also like horse racing, enjoy cigars and a good port wine.
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3 comments:
This thing scares me a little. It is not an ETF, it's an ETN. It does not `own' anything in the AMZ. Instead it is tracking the index using 100% unsecured debt. You are entirely trusting the credit-worthiness of JP Morgan here. My understanding is that all of Lehman's ETNs became worthless when they went under last fall.
According to JPM's AMJ fact sheet, the expense ratio is 0.85%, which is a substantial savings compared to the various MLP CEF's. But what kind of risk are you assuming?
I guess its the full faith and credit of JP Morgan. This effectively replaces the bear stearns mlp etn. Did all the lehman etn's go down in flames?
Found this post on Lehman ETNs, for what it's worth:
http://www.etncenter.com/Lehman-Brothers-ETNs-Delisted
Yes, one is completely trusting JPM-Chase to bankroll this thing. This is a debt instrument that matures in 2024, but pays quarterly `coupons' that I still don't quite understand. In that respect, it is different from other ETNs that pay out only at maturity. The first wave of ETNs, however, were commodity trackers and didn't worry about dividends and such. JPM had to morph things to deal with distributions, it seems.
Another thing to consider is that AMJ does not appear to be using leverage. Last fall, the Tortoise and Kayne-Anderson funds were forced into selling because of their debt covenants. This no doubt added to the MLP market panic.
While a step in the right direction, I'd be more interested in an index tracking FUND that actually owns the MLPs. Not sure why this hasn't happened yet -- perhaps because it's a niche market that is too low cap.
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