MLPs build, acquire and operate transportation assets. While investors link MLPs with energy, specifically natural gas and crude oil, they are more involved with transporting the commodities. Consequently, the performance of MLPs is less dependent on commodity prices than on how much of the commodity is pushed through. [The 411 on MLP ETFs & ETNs]
The the largest MLP-related ETF, Alerian MP ETF (NYSEArca: AMLP),has $6.9 billion in assets under management. AMLP has a 5.96% 12-month yield. The ETF’s top holdings include Enterprise Products Partners (NYSE: EPD) 9.5%, Kinder Morgan Energy Partners (NYSE: KMP) 9.2% and Magellan Midstream Partners (NYSE: MMP) 7.2%.
“We see EPD benefiting from several potential catalysts, including its strong presence in shale plays, growing NGL production, export opportunities, and its $8 billion of major growth projects under development for the next two-and-a-half years, which we expect will support growing distributions,” according to Tanjila Shafi, equity analyst at S&P Capital IQ.
For more information on master limited partnerships, visit our MLPs category.
Max Chen contributed to this article. Tom Lydon’s clients own shares of AMLP.