JPMorgan Launches New MLP ETF

Alerian Capital Management announced that JPMorgan Chase & Co. (JPM) launched an Exchange Traded Note based on Master Limited Partnerships in the Alerian MLP Index. The ticker symbol is AMJ . AMJ has a limited track record, just over one month, which tracked the spectacular rise of the Alerian MLP Index in April. More information on the fund is available here.

This ETF tracks a portfolio of MLPs aimed at emulating the Alerian MLP Index. But it has advantages others don't because MLPs are master limited partnerships. Partnership ownership is measured in units, not shares. Their quarterly payments are called distributions, not dividends. Distributions are typically 80-90% tax free (which really means tax deferred bringing tax hassle). Some accountants handle the hassle better then others, although ordinary computer tax packages are supposed to do the tax work very well. MLPs send K-1 tax packages around March 15, but they are trying to speed up distribution of the statements.

However, an ETF is a corporation which issues shares. Taxable dividends are reported on 1099s, unless they are paid as stock dividends in which case there is no need for tax statements. As stocks, they are also IRA (retirement account) friendly.

The ETF gives an averaging effect of many MLPs. Those who want to invest in MLP growth but are afraid because of tax issues from distributions, may want to take a look at this ETF.

Disclosure: I have no position in AMJ

Comments

[Alan Young:]

WTF? You say it's an ETN, then you say it's an ETF. Important distinction! (If you had linked the original announcement, it would be easy to check).

The big deal with MLPs is not price appreciation—which an ETN would track accurately— but distributions. No mention of how this new product will take advantage of the cash payments.

The product may or may not be useful, but this article does not give much of a clue.

May 06 01:34 PM

[Augustus:]

I'm not sure what the difference is between this ETN and the one issued by Bear Sterns that tracks the same Alerian Index. That ETN is listed as BSR and still trades after Bear was absorbed by JPM. Anyone have any idea on the logic of JPM now sponsoring two of these?

May 06 05:36 PM

[one eye:]

Thank you for the symbol, I can work out the rest for myself.

May 08 01:14 AM

[Ultrabase:]

Does anyone know where to find a daily NAV for this ticker so we can figure out the premium/discount?

Note that the previous BearStearns ETN (ticker BSR) has been delisted, apparently leaving the shareholders stranded with no way to trade it. This is an outrage and should be investigated by the SEC.

Jul 25 04:14 PM