Monday Mailbag: I Want to Buy the Alerian

Without fail, the following two conversations occur at least once a week here at Alerian, both of which begin with completely valid questions. (Admittedly, I didn’t know indices weren’t investable until I started work at Alerian.)

Conversation #1

Investor: I’d like to buy your AMZ fund. It’s on Yahoo Finance, but when I tried to buy it in my account, it said it doesn’t exist.

Alerian: The AMZ is an index and indices are not investable. You are welcome to look on our Linked Products page for products designed to track the AMZ.

Investor: What do you mean, I can’t buy the AMZ? Why is there even a ticker then?

Alerian: The index ticker exists so you can easily track performance. The AMZ is an index, just like the S&P 500 is an index. But you can’t actually buy the S&P 500. You have to buy a mutual fund or ETF that is designed to track the S&P 500. For example, the ticker for the S&P 500 is SPX. But you can’t buy that. You have to buy a mutual fund like the Vanguard 500 Index Fund Investor Shares (VFINX) or an ETF like the SPDR S&P 500 ETF (SPY).

If you want to “buy the AMZ,” there are two publicly traded products that are designed to track the AMZ: the JPMorgan Alerian MLP Index ETN (AMJ) and the ETRACS Alerian MLP Index ETN (AMU).

Just remember: Fish are friends, not food. And indices are benchmarks, not products.

Conversation #2

Investor: I want to buy the Alerian.

Alerian: Alerian is a privately owned indexing firm. We do not manage any assets nor market any products ourselves; however, there are several products issued by third party providers that are linked to our indices. Is there a particular product you had in mind?

Investor: I want to buy your fund, the Alerian. I saw a commercial on TV about it.

Alerian: Oh, you must be referring to the Alerian MLP ETF (AMLP), which is distributed by ALPS Portfolio Solutions. Their number is 877.398.8461.

Investor: So it’s not your fund?

Alerian: Nope. We license our name and index data to them, and they issue, market, and promote the product.

The links to the exchange-traded products in this post are for informational purposes only. Alerian does not sponsor, endorse, sell, or promote any investment product linked to or based on the Alerian Index Series. Additional disclaimers can be found here.

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