Midstream ETFs are the only segment of energy that has seen inflows in 2024, as broader energy and other subsectors have continued to see outflows.
The Alerian MLP ETF (AMLP) has seen $1.2 billion in net flows year to date through November 19. Meanwhile, the Energy Select Sector SPDR ETF (XLE) and the Vanguard Energy ETF (VDE) have seen $2.8 billion and $679 million, respectively, in net outflows, according to VettaFi Pro.
AMLP tracks the Alerian MLP Infrastructure Index (AMZI), a composite of energy infrastructure MLPs that earn most of their cash flow from fee-based midstream activities. AMLP has $9.6 billion in assets under management, making it the largest MLP ETF and second largest energy ETF available to investors.
The fund has seen increased attention following the election, garnering net inflows of $291 million from November 6 through November 19.
Why Invest in Midstream
AMLP is a compelling offering in the current environment due to its attractive yield and defensiveness.
Midstream can offer generous income regardless of the interest rate environment, making it an appealing option during the Fed’s rate-cutting cycle. Furthermore, the generous income offered by MLPs can help offset volatility. The fund’s underlying index was yielding 7.1% as of November 20.
See more: Midstream ETFs AMLP & ENFR Increase Q4 Distributions
Additionally, the midstream segment is less sensitive to moves in commodity prices compared to other energy subsectors, given midstream’s fee-based business model, which supports stable cash flows.
Despite weak oil prices and energy sentiment for much of 2024, the midstream segment has performed well this year. AMLP is up 23.5% year-to-date through November 20. Following the election, the fund has gained 4.2% since November 5.
For more news, information, and analysis, visit the Energy Infrastructure Channel.
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