Toronto-based Horizons ETFs Management (Canada) Inc. today announced the launch of the Horizons Canadian Midstream Oil & Gas Index ETF the first Canadian-listed ETF focused exclusively on Canada’s midstream oil and gas sector.

The fund begins (TSX:HOG) begins trading on the Toronto Stock Exchange (TSX) today.

HOG seeks to replicate, to the extent possible, the performance of the Solactive Canadian Midstream Oil & Gas Index, net of expenses.

Calculated by Frankfurt, Germany-based Solactive AG, the Midstream Index is designed to provide exposure to equity securities of a group of Canadian oil and gas companies in the midstream sector — companies involved in the transportation and servicing of energy, such as pipelines.

It is an equal-weight index that measures the performance of a selection of Canadian midstream oil and gas companies listed on the TSX.

“Most energy investors are familiar with Canada’s larger energy producers and exploration companies, but exposure to the midstream sector presents them with a new opportunity for diversification and yield,” said Howard Atkinson, president of Horizons ETFs, in a release.

“Midstream companies have historically had lower volatility and generated higher yields than stocks in the upstream (extraction) and downstream (refinement) sectors. In many ways, their return profile is similar to master limited partnerships (MLPs), which are popular income-focused energy sector investments in the U.S.”

Currently the Midstream Index holds 12 stocks, very few of which overlap with the securities held in the S&P/TSX Capped Energy Index, the most widely followed benchmark for Canadian energy stocks.

“Considering many of the names in the index are not held in the broader S&P/TSX Capped Energy Index, HOG can provide energy investors broader diversification for their portfolio,” said Mr. Atkinson.

Historically, midstream stocks have generated attractive yields which can also hold appeal for income seeking investors because fluctuations in oil and gas prices do not affect their bottom line revenues.

“Producers generally have to pay the same price to transport crude or natural gas, regardless of the actual price they receive for the commodity,” said Atkinson. “It’s for this reason that the midstream sector has always been classified as an income play and continued to generate dividend yields in excess of 4% annually.”