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.
DISCLOSURES
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.
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SOURCE Global X Funds