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MLPA: MLP ETF, Strong Energy Play, 10.8% Yield

Mar. 01, 2021 10:58 PM ETGlobal X MLP ETF (MLPA)49 Comments


  • MLPA is an index ETF investing in energy MLPs.
  • Energy companies, including MLPs, are quite risky and volatile, but possible capital gains would be outstanding if energy prices recover.
  • MLPs also offer strong distribution yields, with MLPA yielding 10.8%.
  • Risks are high but so are returns, and I'm quite bullish about the industry.
  • This idea was discussed in more depth with members of my private investing community, CEF/ETF Income Laboratory. Get started today »

The Global X MLP ETF (NYSEARCA:MLPA) is an index ETF investing in energy MLPs. MLPA offers investors a strong 10.8% distribution yield and the potential for substantial capital gains as economic conditions stabilize, but risks are high. The fund's holdings are strongly dependent on energy prices and economic conditions, expect sizable losses during downturns or commodity price crunches. I'm bullish about the economy, so I consider the fund a buy. On the other hand, due to its risky holdings, the fund is only appropriate for more bullish investors. Investors looking for safer funds and more dependable distributions should look elsewhere.

The Global X MLP & Energy Infrastructure ETF (MLPX) is similar to MLPA, but focusing on higher-quality midstream energy corporations. MLPX is more appropriate for more risk-averse investors, although its distribution yield of 7.5% and its potential capital gains are both lower compared to MLPA.

Fund Basics

Fund Overview - Risky High-Yield Energy Play

MLPA is an index ETF investing in MLPs. The fund tracks the Solactive MLP Infrastructure Index, a broad-based index of the same.

MLPs are a type of corporate structure with some benefits, drawbacks, and differences with more common corporations or C-corps. For the purposes of this article, the important thing is that MLPs are energy infrastructure companies focusing on the transportation, distribution, and storage of energy products. There are a couple of exceptions, none of which are included in MLPA or its parent index. Companies are also able to engage in these activities without being structured as MLPs, these are also not included in MLPA.

MLPs sometimes have complicated tax reporting standards, but that is not the case for MLPA. Investors don't have to file special forms, nor

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This article was written by

Juan de la Hoz profile picture
CEF/ETF income and arbitrage strategies, 8%+ portfolio yields

Juan has previously worked as a fixed income trader, financial analyst, operations analyst, and economics professor in Canada and Colombia. He has hands-on experience analyzing, trading, and negotiating fixed-income securities, including bonds, money markets, and interbank trade financing, across markets and currencies. He focuses on dividend, bond, and income funds, with a strong focus on ETFs, and enjoys researching strategies for income investors to increase their returns while lowering risk.


I provide my work regularly to CEF/ETF Income Laboratory with articles that have an exclusivity period, this is noted in such articles. CEF/ETF Income Laboratory is a Marketplace Service provided by Stanford Chemist, right here on Seeking Alpha.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

This article was originally published to members of the CEF/ETF Income Laboratory on January 17 2021.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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