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Ron Rowland  

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  • iPath Natural Gas ETN Is A Broken Product [View article]
    UNG has a functioning creation/redemption mechanism and is not broken.
    Jan 5, 2015. 08:22 AM | Likes Like |Link to Comment
  • SEC Gets One Right Putting Kibosh On Nontransparent ETFs [View article]
    Read the article again. I'm not against nontransparent portfolios trading on an exchange. I'm against allowing them to be called "ETFs" since the word/acronym means "transparent exchange traded fund" in the eyes of the public.

    The investing public needs to be assured that when they are a buying something called and ETF that it is transparent and has a functioning creation/redemption mechanism that keeps the price close to NAV.

    If it doesn't have these features, then it should be banned from being called an ETF. They need to come up with a new and non-confusing name.
    Oct 27, 2014. 08:12 AM | 1 Like Like |Link to Comment
  • Alerian MLP ETF Finally Admits Its 8% Expense Ratio [View article]
    Neither one invests in MLPs and are not relevant to this article.
    Oct 24, 2014. 09:20 AM | Likes Like |Link to Comment
  • What Do The Pros REALLY Think About The Market? [View article]
    There are also huge time frame differences in these surveys. The NAAIM survey is weekly and reported with only a day or two lag. The Barron's survey is conducted every 6 months (just 1/26 the frequency of NAAIM) and has a lag time of ??? (probably a month or more and is then not updated for another 6 months).
    Oct 23, 2014. 07:31 AM | 3 Likes Like |Link to Comment
  • Alerian MLP ETF Finally Admits Its 8% Expense Ratio [View article]
    kingjayk says "The fact remains that in a taxable account the tax liability from the income is deferred which is the same ~8% the fund is reporting. It's almost comical to complain about a product only being up 12%"

    In a taxable account, your tax liability is IN ADDITION to the 8% the fund is reporting - it's plain and simple double taxation.

    Yes, you got 7% in tax-deferred distributions and 5% in capital gains while the underlying index had 7% in tax-deferred distributions and 13% in capital appreciation. You are being robbed of 8% of your total return.

    Meanwhile, an ETN following the same index would give you 6% in taxable distributions (7% minus 1% expenses) and the full 13% of capital appreciation.

    With the ETF you received a total of 12% - all tax deferred.
    With the ETN, you received 13% tax-deferred plus another 6% taxable.
    Oct 22, 2014. 02:17 PM | Likes Like |Link to Comment
  • Diversifying In A Dividend Portfolio - MLPs In One Basket [View article]
    Please note that AMJ is no longer issuing new notes, making the process of arbing the price to NAV broken. Although large premiums have not developed yet (max of about 5%), it is possible they will in the future. Any buyer should check the premium before purchasing AMJ.
    Oct 22, 2014. 08:51 AM | 1 Like Like |Link to Comment
  • Alerian MLP ETF Finally Admits Its 8% Expense Ratio [View article]
    Yes, a good portion of the distributions that AMLP makes is "tax deferred" - I do not think I have ever shied away from this fact. The mistake many people make is believing the distributions tax-free.

    However, the HUGE point here is that the fund's total return has been reduced by 8% per year i(due to its own tax liabilities) n order to make the 7% tax-deferred payments. Holders of AMLP still have to pay capital gains taxes, taxes on all tax-deferred distributions received, on top of the 8% per year they have already been clipped in taxes.
    Oct 22, 2014. 08:44 AM | Likes Like |Link to Comment
  • Can The Alerian MLP ETF And Its 8% Expense Ratio Really Be Trusted Anymore? [View article]
    Tortoise, I began warning investors bout AMLP two years before Morningstart did. See http://bit.ly/HSyzSd

    You are not getting your 12%-15% price appreciation - that is where the 8% is taken out of, leaving you (and other AMLP shareholders) with something closer to 4%-7% price appreciation.

    How did it happen? Touting access to tax-efficient high yield MLPs without K1s while failing to say it was in the most tax-inefficient wrapper on the planet - a U.S. C-corporation.
    Sep 30, 2014. 09:29 PM | 2 Likes Like |Link to Comment
  • Can The Alerian MLP ETF And Its 8% Expense Ratio Really Be Trusted Anymore? [View article]
    That is $9B of mostly uninformed money. If you want lower volatility, then put some of your investment in cash instead of paying 8%.
    Sep 30, 2014. 10:18 AM | Likes Like |Link to Comment
  • Can The Alerian MLP ETF And Its 8% Expense Ratio Really Be Trusted Anymore? [View article]
    You will still have to pay all of your own taxes. The income does not come to you clean - it is tax deferred. Your taxes are on top of the fund's taxes. Your Uncle Sam loves you!
    Sep 30, 2014. 10:16 AM | 1 Like Like |Link to Comment
  • VXX, VXZ ETNs Allow You to Buy Volatility [View article]
    Theoretically, you would never have to cover. However, the notes might eventually be settled for a few cents on the dollar years later, so you might want to cover at some point to remove any future risk.
    Sep 10, 2014. 09:50 AM | Likes Like |Link to Comment
  • Alerian MLP ETF Finally Admits Its 8% Expense Ratio [View article]
    I have not looked at KYN or TYG, but nearly every MLP CEF I have looked at is a C-corp and the taxation discussion in this article applies - you should see it in their expense ratios and prospectus. However, most MLP CEFs also employ some leverage which tends to offset the tax drag. Since they do not claim to track an index it is not a straight forward process to determine how successful they are at accomplishing this.
    Aug 27, 2014. 09:23 AM | Likes Like |Link to Comment
  • Alerian MLP ETF Finally Admits Its 8% Expense Ratio [View article]
    I am not convinced the current DTL accounts for the acceleration/recapture of all the ROC distributions AMLP has received from KMP and EPB. I believe the current DTL only accounts for the capital appreciation of the two entities. That is the basis of my comments/arguments that the DTL will need to make a large adjustment.
    Aug 26, 2014. 12:02 PM | Likes Like |Link to Comment
  • Alerian MLP ETF Finally Admits Its 8% Expense Ratio [View article]
    bstacy,
    1) Yes, DTLs go up and down.
    2) Yes, the DTL expense can vary widely from year to year and are probably better expressed as being 37% of the daily index value change.
    3) The correct way to specify the expense would be something like 0.85% plus 37% of the daily index value change. It is just coincidence that it has averaged 8% per year since inception. However, although the is 8% impact has been there all along, it was not until this year that AMLP admitted it.
    3) No, the tax expense is not computed by dividing the DTL into portfolio value. The DTL (about $1.2 billion) does not appear in AMLP's calculation of its expense ratio. Your statement that AMLP has not paid any taxes yet is incorrect. AMLP has paid taxes nearly every year, that is what pushed its reported expense ratio to 1.4%, then to 4.8%, and now to 8.5%.
    3) The $1.2 billion is not the DTL since inception, it is the current DTL after making tax payments the past 3 or 4 years.
    3) The DTL can mitigate downward moves in the index only if there are DTLs. If AMLP had declined in its first year of operation, it would have went down commensurate with the index since it had no cushion built up. By the same token, if the Kinder transaction and fund redemptions deplete the DTL, then it the day when the DTL can no longer mitigate downside moves will arrive quicker.

    3) Said another way, shareholders incur the DTL expense daily, and it has averaged about 8% per year. AMLP's expense ratio only reflects taxes actually paid, which were about zero in year one, but happened to amount to 8% during the previous reporting period. Actual taxes paid will likely be much more than 8% next year after the tax bill on the Kinder transaction is paid.

    4) the DTLs will not be replaced at the time of the Kinder transaction. The DTLs will increase significantly at that time (late December). The DTLs will not be reduced until 2015 when taxes are actually paid.

    5) AMLP's taxes are due annually on all taxable income which includes the taxable portion of distributions received, capital gain realization due to portfolio changes, distributions received when cost basis goes to zero, etc. The kinder transaction will force the sale of 15% of the portfolio. The underlying index includes MLPs only - no general partners. Therefore, the15% Kinder position will be removed at some time (not sure if immediately or at next reconstitution).

    6) the "income return" ($ paid out) should be identical for the index and the AMLP. The effective leverage you mention will give the "appearance" of a higher yield for the NAV reduced fund versus the value of the index. That is true for anyone that had a portion of his basis confiscated. If you are getting a dime dividend on a dollar investment, but then I take away 20 cents of your principal, you are now getting that same dime on 80 cents. You may think your yield went from 10% to 12.5%, but you are still getting the same dime.
    Aug 25, 2014. 08:30 AM | Likes Like |Link to Comment
  • Alerian MLP ETF Finally Admits Its 8% Expense Ratio [View article]
    Inside of an IRA, yield doesn't mean a thing - only total return does.
    Aug 23, 2014. 12:33 PM | 1 Like Like |Link to Comment
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