Amplify Launches New Oil-Hedged MLP Fund

Chicago-based ETF company, Amplify, launched a new exchange traded fund this week, a master limited partnership fund that protects its holdings by hedging oil futures. “Recent history has shown that oil price declines can have a significant impact on MLP share prices,” said Christian Magoon, CEO of Amplify ETFs. The Amplify YieldShares Oil-Hedged MLP Income ETF (AMLX AMLX 15,78 -0,79 -4,77%) is the fourth income-oriented ETF to launch on their Amplify YieldShares platform. Some of its early include Energy Transfer Partners (ETP 21,47 0,00 0,00%); Williams Partners (WPZ 47,37 0,00 0,00%); Spectra Energy Partners (SEP 35,40 -0,43 -1,20%); Summit Midstream Partners (SMLP 15,69 -0,64 -3,92%); Tesoro Logistics (TLLP 52,13 +0,13 +0,25%) and Buckeye (BPL 41,46 0,00 0,00%). Over the last 10 years, 80% of the days where crude oil prices declined 2% or more, master limited partnerships fell as well, according to comparisons between the Alerian MLP Total Return Index and the S&P GSCI Crude Oil Index. While they are not entirely correlated, if MLPs are up, it’s likely because they are getting a lift from oil. If MLPs are down, oil has a lot to do with it. By hedging, Amplify believes they can also protect the income potential of MLPs over the long term. It has not been a good year from the MLP, mostly all of them in the oil and gas space. The Alerian MLP (AMLP 44,21 -0,11 -0,25%) ETF is down 4%, with the iShares S&P GSCI Crude Oil Return (OIL 28,42 0,00 0,00%) fund down a whopping 20.6%. MLPs have had a tough five years due to oil. The Alerian fund is down over 22% in that period, but oil is down even more, around 75%.