Midstream ETFs recorded strong flows in September, as the subsector outperformed broader energy for another consecutive month.
The Alerian MLP ETF (AMLP) and the Alerian Energy Infrastructure ETF (ENFR) saw $73 million and $8 million, respectively, in net flows in September. AMLP accreted $697 million in net flows year to date through October 2, while ENFR has garnered $23 million during the same period.
AMLP is the second largest energy ETF by assets after the Energy Select Sector SPDR Fund (XLE). Broad energy ETF XLE saw nearly $600 million in net outflows in September, according to data from VettaFi PRO.
Many investors are attracted to midstream energy ETFs for their history of providing compelling income and returns. Midstream can offer generous income regardless of the interest rate environment, making it a compelling option during the Fed’s rate-cutting cycle.
See more: “Looking for Income as Rates Fall? Try Midstream/MLPs”
Additionally, midstream is less sensitive to moves in commodity prices compared to other sectors of energy, given midstream companies’ fee-based business models, which support stable cash flows.
Midstream Energy ETFs vs. Broader Energy Performance
The midstream segment has performed well this year despite weak oil prices and energy sentiment for much of this year. AMLP and ENFR held steady in September, returning -0.4% and 0.6%, respectively, while XLE fell 3% during the month. Year to date through October 1, AMLP and ENFR have climbed 18.3% and 28.7%, and XLE has gained 9.7%.
Strength in natural-gas-focused names, such as Williams (WMB), Kinder Morgan (KMI), and ONEOK (OKE), has supported ENFR’s performance.
See more: “AI, Natural Gas & Midstream’s Emerging Opportunities”
To learn about the long-term growth drivers for midstream/MLPs, please join our upcoming webcast on Tuesday, Oct. 8, at 2 p.m. ET (register here).
For more news, information, and analysis, visit the Energy Infrastructure Channel.
VettaFi LLC (“VettaFi”) is the index provider for AMLP and ENFR, for which it receives an index licensing fee. However, AMLP and ENFR are 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 and ENFR.