ETRACS Alerian Midstream Energy High Dividend Index ETN (AMND)AMND

ETRACS Alerian Midstream Energy High Dividend Index ETN (AMJ)

Profile

Primary Focus: AMJ focuses on tracking the Alerian Midstream Energy Select High Dividend Index, composed of US midstream energy companies with high dividend yields. It provides exposure to the midstream energy sector through investments in MLPs (master limited partnerships) and C-Corps.

Investment Strategy: Passively tracks the index, offering diversification across the midstream energy sector.

Asset Allocation: The ETF primarily invests in MLPs (71.73%) and C-Corps (19.39%) in the United States energy sector.

Objective

Primary Investment Goal: To track the performance of the Alerian Midstream Energy Select High Dividend Index, providing investors with high dividend income and long-term capital appreciation potential.

Issuer

Company: UBS AG London Branch Reputation and Reliability: UBS is a globally recognized financial services firm with a strong reputation and track record. Management: The ETF is managed by a team of experienced professionals at UBS Investment Bank.

Market Share

Market Share: AMJ has a relatively small market share within the midstream energy ETF space, accounting for about 0.5% of the sector's total assets under management.

Total Net Assets

Total Assets under Management: $161.09 million (as of October 26, 2023)

Moat

Competitive Advantages:

• High Dividend Yield: AMJ offers a significantly higher dividend yield compared to the broader market and other midstream energy ETFs.
• Diversification: It provides exposure to a diverse range of midstream energy companies, reducing single-stock risk.
• Passive Management: The ETF's passive management approach allows for lower expense ratios and potentially higher returns over time.

Financial Performance

Historical Performance: AMJ has a mixed track record, delivering positive returns in some years and negative returns in others. However, it has generally outperformed the broader market during periods of high energy prices. Benchmark Comparison: AMJ has generally underperformed the Alerian Midstream Energy Select High Dividend Index, likely due to its expense ratio and tracking error.

Growth Trajectory

Trends and Growth Patterns: The midstream energy sector is expected to experience moderate growth in the coming years, driven by increasing demand for energy infrastructure and rising oil and gas production. However, this growth could be impacted by factors such as regulations, environmental concerns, and competition.

Liquidity

Average Trading Volume: 97,746 shares (as of October 26, 2023) Bid-Ask Spread: 0.04%

Market Dynamics

Factors Affecting Market Environment:

• Energy Prices: High energy prices tend to benefit midstream energy companies, which can lead to increased dividends and higher ETF returns.
• Economic Indicators: Economic growth and infrastructure spending can positively impact the midstream energy sector.
• Regulations: Changes in regulations can affect the profitability of midstream companies and impact the ETF's performance.

Competitors

Key Competitors:

• MLPA - Global X MLP ETF (2.3% Market Share)
• AMLP - Alerian MLP ETF (2.1% Market Share)
• FDD - First Trust MLP and Energy Income Fund (1.8% Market Share)

Expense Ratio

Expense Ratio: 0.85%

Investment Approach and Strategy

Strategy: Passively tracks the Alerian Midstream Energy Select High Dividend Index. Composition: Primarily invests in MLPs and C-Corps in the US energy sector.

Key Points

• High dividend yield
• Diversified portfolio
• Passive management
• Lower expense ratio compared to some competitors

Risks

• Volatility: The ETF is subject to the volatility of the underlying midstream energy sector.
• Market Risk: Changes in energy prices, economic conditions, and regulations can negatively impact the ETF's performance.
• Interest Rate Risk: Rising interest rates can make MLPs less attractive to investors, potentially affecting the ETF's performance.

Who Should Consider Investing?

• Income-seeking investors looking for high dividend yields
• Investors who are bullish on the prospects of the midstream energy sector
• Investors seeking diversification within the energy sector

Fundamental Rating Based on AI

Rating: 7/10

Justification: AMJ offers a high dividend yield and exposure to a diversified portfolio of midstream energy companies. However, its historical performance has been mixed, and it faces competition from other ETFs in the sector. Additionally, the ETF carries risks associated with the volatility of the underlying energy sector and potential changes in regulations.

Disclaimer: This analysis is for informational purposes only and should not be considered investment advice. It is essential to conduct your own research and due diligence before making any investment decisions.

Resources:

• ETRACS Alerian Midstream Energy High Dividend Index ETN (AMJ): https://us.spdr.com/etfs/equity/amj
• Alerian Midstream Energy Select High Dividend Index: https://www.alerian.com/indexes/midstream-energy/alerian-midstream-energy-select-high-dividend-index/
• UBS AG London Branch: https://www.ubs.com/global/en/our-firm/our-business/our-structure/london-branch.html