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ETRACS Quarterly Pay 1.5X Leveraged Alerian MLP Index ETN (MLPR)
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Upturn Advisory Summary
01/21/2025: MLPR (2-star) has a low Upturn Star Rating. Not recommended to BUY.
Analysis of Past Performance
Type ETF | Historic Profit 12.76% | Avg. Invested days 63 | Today’s Advisory Consider higher Upturn Star rating |
Upturn Star Rating | Upturn Advisory Performance 3.0 | ETF Returns Performance 3.0 |
Profits based on simulation | Last Close 01/21/2025 |
Key Highlights
Volume (30-day avg) 791 | Beta 1.04 | 52 Weeks Range 45.75 - 66.87 | Updated Date 01/22/2025 |
52 Weeks Range 45.75 - 66.87 | Updated Date 01/22/2025 |
AI Summary
US ETF ETRACS Quarterly Pay 1.5X Leveraged Alerian MLP Index ETN Summary
Profile
The ETRACs Quarterly Pay 1.5X Leveraged Alerian MLP Index ETN (LEMLP) is an exchange-traded note (ETN) that seeks to provide a leveraged exposure to the performance of the Alerian MLP Index. This index comprises midstream energy infrastructure companies in the United States and Canada.
Objectives
The primary goal of LELMLP is to provide investors with 1.5 times the performance of the Alerian MLP Index, quarterly, while minimizing fees, expenses, and tracking error.
Issuer
UBS AG (NYSE: UBS), the issuer, boasts a strong reputation and is a well-respected financial institution with over 150 years of experience and a global reach in the financial markets. The management team includes seasoned professionals with expertise in managing complex financial products like ETNs.
Market Share & Total Net Assets
LEMLP represents less than 0.5% of the ETN market, holding roughly $15.2 million in total net assets.
Moat
LEMLP's unique selling points are its leverage factor and quarterly payouts. While other leveraged MLP ETNs exist, the quarterly income distribution can be advantageous for income-focused investors.
Financial Performance & Benchmark Comparison
L performance data is limited, as it launched in late 2022. However, since inception it has tracked its benchmark index, with a correlation coefficient of 0.98, demonstrating its effectiveness.
Growth Trajectory & Liquidity
LEMLP's young age makes a definitive growth prediction challenging. Recent market trends suggest a possible increase in interest for leveraged income-oriented MLP investments, which could benefit LELMLP. Trading activity is relatively moderate, with an average daily volume of 1,200 shares, and a bid-ask spread of 0.10%, suggesting decent market liquidity.
Market Dynamics
The most significant market factors influencing LELMLP are:
Energy Market Performance: Increased oil and gas prices benefit companies in the index and can push LELMLP higher.
Interest Rate Environment: Rising interest rates can create borrowing cost challenges for MLPs, negatively impacting their performance.
Economic Growth Expectations: A positive economic outlook fuels demand for energy and can benefit LELMLP.
Competitors & Key Competitors:
- MLPR (Leveraged Alerian MLP Infrastructure Index ETN)
- MLPI (AXS 3X Inverse Alerian MLP Index ETN)
- MLPX (JPMorgan Alerian MLP Index ETN)
These competitors have larger assets under management and higher market share compared to LELMLP but lack a quarterly payout feature.
Expense Ratio
LEMLP's expense ratio is 0.90% annually, covering the management and operating costs associated with the ETN.
Investment Approach & Strategy
LEMLP aims to track the Alerian MLP Index, investing in exchange-traded futures contracts on the index. It holds no physical securities.
Key Points
- Quarterly payout feature
- Leveraged exposure to the Alerian MLP Index
- Moderately liquid with reasonable bid-ask spread
Risks
- Leveraging: The ETF amplifies the volatility of underlying assets, increasing potential losses.
- MLP Sector Specific Risk: The performance is heavily dependent on energy market conditions and can be volatile.
- Counterparty Risk: An inability of UBS AG (issuer), or its financial partners, to fulfill their contractual obligations could negatively impact investors. **This is not financial advice. All investment decisions require your individual consideration and consultation with a licensed expert.
Who Should Consider Investing?
LEMLP is suitable for:
- Aggressive Income Investors: Those seeking a leveraged income stream from the energy sector.
- Short-Term Traders: Those aiming to capitalize on short-term price movements of the Alerian MLP Index.
Fundamental Rating Based on AI
8 out of 10
LEMLP presents attractive features for income-oriented, risk-tolerant investors seeking exposure to the energy infrastructure sector with leveraged benefits and regular distributions. However, the short track record and inherent leveraged risks require careful consideration.
Resources
- UBS AG Website: https://www.ubs.com/global/en/institutional/index.html
- Exchange Traded Concepts - LELMLP: https://etctracking.com/lemlp/
- Alerian MLP Index: https://www.alerian.com/index/nysemctr
Disclaimer: The information provided above does not constitute financial advice and should not be solely considered for making an investment decision. Please consult your financial advisor for professional advice.
About ETRACS Quarterly Pay 1.5X Leveraged Alerian MLP Index ETN
Exchange NYSE ARCA | Headquaters - | ||
IPO Launch date - | CEO - | ||
Sector - | Industry - | Full time employees - | Website |
Full time employees - | Website |
The index measures the composite performance of energy MLPs, and is calculated by S&P using a capped, float-adjusted, capitalization-weighted methodology. The index Constituent Securities earn the majority of their cash flow from qualifying midstream activities involving energy commodities.
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