The largest MLP ETF available to investors saw strong flows in January, demonstrating continued interest in the midstream space.
The Alerian MLP ETF (AMLP) has hauled in $69 million in net flows year to date through January 30. The ETF is a composite of energy infrastructure MLPs that earn most of their cash flow from midstream activities.
Many investors are attracted to AMLP for its history of providing compelling income and returns.
See more: “MLP M&A Monday: SUN Adding NuStar to Its Galaxy”
MLPs are currently providing more generous yields than other segments of the energy sector and other income-oriented investments. AMLP’s underlying index, the Alerian MLP Infrastructure Index (AMZI), is yielding 7.38% as of January 30.
Furthermore, many midstream names have already announced quarter-over-quarter growth in their dividends for the fourth quarter of 2023.
See more: “2024 Outlook: Macro Uncertainty Favors Midstream/MLPs”
Performance: MLPs and Broader Energy
Total return is another reason why investors are using the MLP ETF in portfolios. MLPs have outpaced broader energy in 2024 to date, strengthened by M&A activity and positive dividend growth.
AMLP advanced 6.0% year to date through January 30, while broader energy, measured by the Energy Select Sector SPDR Fund (XLE), is up 1.4%, each on a total return basis. Over one year, AMLP is up 22.1% while XLE has declined 1.2%.
Despite AMLP’s strong recent performance and significant inflows, the MLP ETF remains a compelling investment opportunity in the current environment. AMLP’s underlying index is trading with a forward EV/EBITDA multiple below its three-year average.
The index’s weighted average forward EV/EBITDA multiple (using Bloomberg 2025 consensus EBITDA) is 8.55x, compared to the three-year average of 8.84x as of December 31.
For more news, information, and analysis, visit the Energy Infrastructure Channel.
vettafi.com is owned by VettaFi LLC (“VettaFi”). VettaFi is the index provider for AMLP, for which it receives an index licensing fee. However, AMLP is not issued, sponsored, endorsed, or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of AMLP.