NEW YORK, May 28, 2015 /PRNewswire/ -- Global X Funds, the New York-based provider of exchange-traded funds (ETFs), today launched the first ETF to provide investors with access to YieldCos, the Global X YieldCo Index ETF (Nasdaq: YLCO). YieldCos are an emerging asset class of income-generating assets in the renewable energy sector. YieldCos are often compared to MLPs as they are both energy-related assets that seek to deliver stable cash flows to investors.
YieldCos are formed when energy companies spin off fully developed assets, such as wind and solar farms, with long term contracts and an objective of returning cash flows to shareholders. Market capitalization for the YieldCo industry currently stands at $39 billion. With 11 announced IPOs in the pipeline, it has become an increasingly popular vehicle for energy firms. YLCO will charge a management fee of 0.65%, or $65 for every $10,000 invested.
"YieldCos exhibit three key investment characteristics many investors have been looking for: high current income, lower volatility, and the potential for dividend growth," said Jay Jacobs, research analyst at Global X Funds.
YieldCos typically enter into long term contracts with customers to mitigate the volatility of energy prices. They have historically had low correlations to traditional equity fixed income benchmarks and currently pay out a yield of 3.3%1. YieldCos differ from MLPs in that YieldCos are set up as traditional corporations and do not generate K-1s.
"We are excited to provide investors with access to a new source of potential alternative income, which has traditionally been limited to MLPs and REITs," said Mr. Jacobs. "YLCO allows investors to participate in this growing field of yield-generating renewable energy projects."
ABOUT GLOBAL X FUNDS Global X is a New York-based sponsor of exchange-traded funds (ETFs), focused on providing high quality and cost efficient investment solutions to institutional and individual investors. Founded in 2008, Global X is recognized by individual and institutional investors for its suite of smart beta, income, and access ETFs. With over 40 funds available across U.S. and foreign exchanges, Global X is one of the fastest growing issuers of ETFs. For more information, please visit www.globalxfunds.com.
Global X Management Company, LLC serves as an advisor to the Global X Funds. The Funds are distributed by SEI Investments Distribution Co., which is not affiliated with Global X Management Company, LLC.
Investing involves risk, including the possible loss of principal. In addition to the normal risks associated with investing, investments in smaller companies typically exhibit higher volatility. The value of securities issued by companies in the energy sector may decline for many reasons, including, without limitation, changes in energy prices; international politics; energy conservation; the success of exploration projects; natural disasters or other catastrophes; changes in exchange rates, interest rates, or economic conditions; changes in demand for energy products and services; and tax and other government regulatory policies. The Fund is non-diversified.
Investments in securities of YieldCos involve risks that differ from investments in traditional operating companies, including risks related to the relationship between the YieldCo and the company responsible for the formation of the YieldCo (the "YieldCo Sponsor"). YieldCo securities can be affected by macro-economic and other factors affecting the stock market in general, expectations of interest rates, investor sentiment towards YieldCos or the energy sector, changes in a particular issuer's financial condition, or unfavorable or unanticipated poor performance of a particular issuer (in the case of YieldCos, generally measured in terms of distributable cash flow). Prices of YieldCosecurities also can be affected by fundamentals unique to the company, including earnings power and coverage ratios. YieldCos may distribute all or substantially all of the cash available for distribution, which may limit new acquisitions and future growth. YieldCos may finance its growth strategy with debt, which may increase the YieldCo's leverage and the risks associated with the YieldCo. The ability of a YieldCo to maintain or grow its dividend distributions may depend on the entity's ability to minimize its tax liabilities through the use of accelerated depreciation schedules, tax loss carryforwards, and tax incentives.
Shares are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Global X NAVs are calculated using prices as of 4:00 PM Eastern Time. The closing price is the Mid-Point between the Bid and Ask price as of the close of exchange. Since the Fund's Shares typically do not trade in the secondary market until several days after the Fund's inception, for the period from inception to the first day of secondary market trading in Shares, the NAV of the Fund is used to calculate market returns.
"INDXX" is a service mark of INDXX and has been licensed for use for certain purposes by Global X Management Company, LLC. Global X Funds are not sponsored, endorsed, issued, sold, or promoted by INDXX nor does this company make any representations regarding the advisability of investing in the Global X Funds.
Carefully consider the Funds' investment objectives, risk factors, charges, and expenses before investing. This and additional information can be found in the Funds' full or summary prospectus, which may be obtained by calling 1-888-GX-FUND-1 (1.888.493.8631), or by visiting www.globalxfunds.com. Read the prospectus carefully before investing.
1 Source: Bloomberg, as of 5/21/2015.
SOURCE Global X Funds