ETF Spotlight: Master Limited Partnerships (AMLP)
July 14th 2011 at 8:03am by Tom Lydon
ETF Spotlight on Alerian MLP ETF (NYSEArca: AMLP), part of an ongoing series.
Assets: $1.2 billion.
Objective: The Alerian MLP fund tries to reflect the performance of the Alerian MLP Infrastructure Index, which is a modified cap-weighted, float-adjusted Index that provides exposure to the overall performance of the U.S. energy infrastructure Master Limited Parternship (MLP) asset class.
Holdings: Top holdings include: Enterprise Products (NYSE: EPD) 9.64%, Kinder Morgan Energy (NYSE: KMP) 9.33%, Plains All American Pipeline (NYSE: PAA) 7.06%, Energy Transfer Partners (NYSE: ETP) 6.96% and Magellan Midstream (NYSE: MMP) 6.94%.
What You Should Know:
- AMLP has an expense ratio of 0.85%.
- The fund has 25 holdings.
- Sector allocations include: Petroleum Transportation 43.70%, Natural Gas Pipelines 32.60% and Gathering & Processing 23.70%.
- MLPs are publicly traded partnerships engaged in transportation, storage and processing of minerals and natural resources. [MLP ETFs: An Alternative to Commodities.]
- MLPs in this area have historically generated very lucrative yields for investors. However, the assets will be affect by any potential interest-rate changes.
- “Motivations for investors holding AMLP are likely to include beliefs that the country’s basic infrastructure requires further investment, that these companies will continue to be able to tap capital markets effectively, that fuel demand will stabilize or start growing going forward, and that interest rates will not dramatically increase,” Morningstar analysts write in a profile of the ETF. [MLP ETFs: A Fixed-Income Alternative.]
The Latest News:
- According to a Zacks Equity Research note, Kinder Morgan Energy continues to develop its presence in the Eagle Ford in Southern Texas after putting up $300 million for building midstream infrastructure used in gathering, transporting and processing shale in the region.
- MLPs operating in the energy sector remain vulnerable to volatile crude oil and natural gas prices, fluctuations in commodity prices and increasing interest rates. Pressure on supply and demand for products may hurt volumes and margins, according to the note.
- Kinder Morgan plans on expanding pipelines in Edmonton to Vancouver to better facilitate overseas oil exports, according to Trefis. Kinder Morgan faces competition from other pipelines operated by energy companies like Enterprise Products.
- U.S. crude and oil product stocks lost ground last week as U.S. imports decreased a greater-than-expected 3.12 million barrels to 355.46 million barrels, according to Reuters.
- Other MLP products include JP Morgan Alerian MLP ETN (NYSEArca: AMJ) and E-TRACS UBS Alerian MLP Infrastructure ETN (NYSEArca: MLPI).
For past stories in this series, visit our ETF Spotlight category.
Alerian MLP ETF
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.