Citigroup Offers Second Exchange-Traded Note, Tied to MLP Index

Citigroup Inc. (C) is offering an exchange-traded note tied to an index of energy master-limited partnerships, a category that makes up more than a third of the total ETN assets in the U.S.

The C-Tracks ETNs Based on the Performance of the Miller/Howard MLP Fundamental Index, which started trading today under the ticker MLPC, charge 0.95 percent in annual fees that accrue daily, according to a prospectus filed with the U.S. Securities and Exchange Commission. The notes pay quarterly coupons based on distributions made by securities in the index.

The rules-based Miller/Howard gauge tracks 25 MLPs selected on the basis of criteria such as distribution growth and estimated capital expenditures, according to the document.

Securities tied to the dividend-paying energy companies are the most popular among investors, with $8.09 billion in assets as of Sept. 24, Bloomberg data show. Total ETN assets have risen by a third this year to $21.5 billion from $16.1 billion, according to the data.

Scott Helfman, a spokeswoman for the bank in New York, declined to comment.

Master limited partnerships, which trade publicly, typically invest in assets ranging from pipelines to ships transporting commodities.

The largest ETN in the U.S., JPMorgan Chase & Co.’s Alerian MLP Index (AMJ) note, links to MLPs and pays variable coupons each quarter, according to offering documents filed with the SEC. It has about $5.6 billion in assets, Bloomberg data show. The fourth-largest, the Etracs Alerian MLP Infrastructure Index ETN (MLPI), has $1.2 billion in assets, Bloomberg data show.

Citigroup offers one other ETN, the C-Tracks ETN on Citi Volatility Index Total Return, which has about $4.1 million in assets, according to Bloomberg data.

To contact the reporter on this story: Kevin Dugan in New York at kdugan4@bloomberg.net

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net

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