Cushing launches new index focused on royalty trusts and upstream E&P MLPs

Jul 3rd, 2012 | By | Category: ETF and Index News

Cushing MLP Asset Management, a US-based SEC-registered investment adviser focused on investments in master limited partnerships (MLPs) and related energy income equities, has announced the launch of the Cushing Royalty Trust and Upstream Income MLP Index (Cushing Royalty Index).

Cushing launches new index focused on royalty trusts and upstream E&P MLPs

The Cushing Royalty Index (CRTY) tracks the performance of publicly traded US royalty trusts and upstream exploration and production (E&P) energy MLPs.

The Cushing Royalty Index has been launched to provide a benchmark that tracks the performance of publicly traded US royalty trusts and upstream exploration and production (E&P) energy MLPs.

The index has been designed for use by Exchange Traded Products (ETPs), including ETFs and ETNs, as well as mutual funds and asset managers.

To be eligible for inclusion in the index, a constituent security candidate must represent royalty or income trust units, limited or general partner interests, or both, of a US royalty trust or E&P MLP that is an operating company, or common units of a limited liability company that is an operating company.  In addition, the candidate must be publicly traded and currently pay a distribution.

The index is currently comprised of 25 US royalty trusts and E&P MLPs, weighted on a float-adjusted market capitalisation basis with the weight of each constituent capped at 7.5% at rebalance.  The index is calculated by Standard & Poor’s and priced on a real-time, daily basis by CME Group under the Bloomberg ticker CRTY as well as on a total-return basis, using end of day pricing, under the ticker CRTYTR.

Jerry Swank, founder and managing partner of Swank Capital, Cushing’s parent company, commented: “With a current yield of 9.7%, the index offers a compelling total return opportunity from both current income and capital appreciation with indirect commodity exposure. We believe there will be significant interest in the index from both retail and institutional investors looking for yield, indirect commodity exposure, and inflation protection.”

Cushing’s two existing MLP-specific indices, the Cushing 30 MLP Index (MLPX) and the Cushing MLP High Income Index (MLPY), are used as the underlying benchmarks for Exchange Traded Notes (ETNs) issued by Credit Suisse and Morgan Stanley respectively.

The Cushing 30 MLP Index (MLPX), an equally weighted benchmark for the MLP asset class that is focused on total return, underpins the Credit Suisse MLP Index ETN (MLPN). MLPN is listed on the NSYE Arca and has over $218 million invested in it.

The Cushing MLP High Income Index (MLPY), which incorporates a broader base of higher-yielding MLPs utilising a proprietary tiered methodology for security selection, underpins the Morgan Stanley Cushing MLP High Income Index ETN (MLPY). MLPY is listed on the NSYE Arca and has just under $19 million invested in it.

The Cushing Royalty Trust and Upstream Income MLP Index will compete against rival MLP-focused indices including those published by Alerian, Wells Fargo, Solactive and Tortoise.

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