MLP ETFs Provide High-Yield, Low-Volatility Energy Sector Exposure

The MLP investment has shown low levels of volatility, with an average beta of 0.72, or 72% that of the broader equity market, over the past three years. In addition, over the past 12 years, the Alerian MLP index and the Cushing 30 MLP index have earned an annual total return of 20.5% and 23.6%, respectively, compared to the S&P 500’s 4.5%. [Master Limited Partnership ETFs Endure Rising Rates]

“With less cash-flow volatility, MLPs have demonstrated low volatility as equity investments,” Maresca added. “We believe this asset class will continue to perform well longer term given the increased demand for US infrastructure needs, but that gains will come at a less pronounced pace.”

Investors interested in MLPs can take a look exchange traded options like the JP Morgan Alerian MLP Index ETN (NYSEArca: AMJ), which has a 0.85% expense ratio and a 4.56% yield, or the Credit Suisse Cushing 30 MLP Index ETN (NYSEArca: MLPN), which has a 0.85% expense ratio and a 4.61% yield. Both funds are up about 27% year-to-date. [Direxion Files Master Limited Partnership ETF]

For more information on master limited partnerships, visit our MLPs category.

Max Chen contributed to this article.