MLPs offer investors all sorts of advantages, from reduced tax burdens to key exposures to commodities. The Alerian MLP ETF (AMLP), a leading MLP fund, presents investors with one avenue into the space in the ETF wrapper. The fund signaled a buy on Monday, suggesting it could be a good time to take a look at MLPs.
AMLP’s price rose above both its 50-day and 200-day simple moving averages (SMAs) early on Monday. The MLP fund rose to $39.15 as of midday, above AMLP’s respective 50-day ($38.47) and 200-day ($39.14) SMAs. Traditionally, such a price swing indicates promising momentum for a security or an ETF. Should the price lift the 50-day SMA above the 200-day indicator, that would likely indicate that said momentum has solidified.
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AMLP tracks the Alerian MLP Infrastructure Index and charges an 87 basis point fee. The MLP fund has seen mixed flows over the month of May, with $177.8 million in on May 11 and $171 million out the following day.
MLPs, or master limited partnerships, operate as publicly traded limited partnerships. Combining the liquidity of stocks with the tax benefits of private partnerships, they offer solid long-term value. MLPs saw solid earnings news lost amid macro headlines lately, which may have also obfuscated the value found in AMLP.
Through its index, AMLP invests in MLPs earning at least 50% of EBITDA from assets not directly exposed to commodity prices. AMLP invests solely in domestic equities in the U.S., offering a locked-in look at just American MLPs.
With volatility looming over the markets via rising rates, recession risk, inflation, and the debt ceiling, an MLP fund could be a potent tool. The reduced tax burden may help long-term portfolios, while its bespoke commodities play can provide solid long-term value. With AMLP sending an initial buy signal, keep an eye on the fund for further signals if momentum continues.
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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.
