Cushing Enters ETF Space With MLP-Related Sector Funds

Cushing Asset Management, the company behind some of the most widely master limited partnership benchmarks, is entering the exchange traded funds arena with its own MLP-related funds.

The company launched the Cushing Sector Plus ETFs, a suite of four products that mix common stocks from various sectors along with MLPs.

What Happened

The new ETFs “seek to provide investors with sector exposure by seeking to replicate the performance of corresponding Cushing Indices,” according to the provider. “The energy, utility, transportation, and energy supply chain indices are sector oriented with a custom yield weighing methodology and include master limited partnerships, which is designed to add an income focus and diversification while maintaining the overall sector attributes.”

Cushing's new ETFs cap MLP exposure at 24 percent, which helps investors avoid the K-1 form come tax time.

The Cushing Energy & MLP ETF XLEY follows the Cushing Energy Index. XLEY allocates 76 percent of its weight to companies from the S&P 500 Energy Index and 24 percent to MLPs. The new ETF holds 36 stocks and charges 0.65 percent per year, or $65 on a $10,000 investment. Top 10 holdings in the new fund include Williams Cos. WMB and Exxon Mobil Corp. XOM.

Why It's Important

The Cushing Energy Supply Chain & MLP ETF XLSY features material companies, traditional energy firms and MLPs at weights of 38 percent, 38 percent and 24 percent, respectively. As is the case with XLEY, XLSY's components are yield-weighted. XLSY is home to 49 stocks, including Williams and International Paper Co. IP.

The Cushing Transportation & MLP ETF XLTY combines MLPs with companies from the Dow Jones Transportation Average and also follows an in-house, yield-weighted index. There are natural synergies between MLPs and transportation companies because some Dow Jones Transports components “are involved in transporting both crude, refined, and processed energy products,” according to Cushing.

XLTY components include Delta Air Lines Inc. DAL and Union Pacific Corp. UNP. Both XLEY and XLTY charge 0.65 percent per year, or $65 on a $10,000 investment.

What's Next

For investors looking to boost their yield profiles, the Cushing Utility & MLP ETF XLUY combines utilities stocks and MLPs. The new ETF holds 40 stocks and each of its top five holdings are utilities providers. XLUY also has an annual fee of 0.65 percent.

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