Exchange traded products tracking master limited partnerships (MLPs) were thrashed when oil prices tumbled over the past two years, but with crude rebounding in 2016, some income investors are renewing their affinity for products such as the JPMorgan Alerian MLP Index ETN (NYSEArca: AMJ) and the ALPS Alerian MLP ETF (NYSEArca: AMLP).
AMLP is the largest master limited partnership-related ETF available, with close to $8 billion in net assets under management, is higher by more than 8% over the past month while the rival AMJ is up about 10% over that period.
MLPs primarily deal with the distribution and storage of energy products, so their business model is less reliant on the commodities market since MLPs profit off the quantity of oil and natural gas they are able to move around. Consequently, MLPs have historically shown a weaker correlation to energy prices over longer periods as MLPs act more like energy toll roads, profiting on the volume of oil moving through their pipelines.
Although AMJ and AMLP are on a torrid pace as of late, some MLP analysts see the asset classes as offering compelling value.[related_stories]