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AMJ Outperformed Broad Energy and Market ETFs Last Week

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JPMorgan Alerian MLP Index ETN

The JPMorgan Alerian MLP Index ETN (AMJ) rose 4.7% in the week ended August 14, 2015. The Alerian MLP Index (AMZ), AMJ’s underlying index, generated 5.2% returns including dividends.

The ETN outperformed broad-market and energy-sector ETFs during the week. The broad-market SPDR S&P 500 ETF Trust (SPY) rose 0.7% and the Energy Select Sector SPDR ETF (XLE) rose 3.4% during the week. Enterprise Products Partners (EPD), the index’s largest constituent, rose 7.6% in that time frame.

The above graph compares AMJ’s returns for the week with those of the underlying index, SPY, and XLE. All returns are gross dividends. AMJ has a tracking fee of 0.85% per year. Its current market capitalization is $4.3 billion.

ETNs are senior unsecured debt securities. ETN investors are exposed to the issuer’s credit risk—in this case, JPMorgan Chase’s (JPM). ETNs provide investors an easy way to gain exposure to different market indices.

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Alerian MLP Index

The Alerian MLP Index (AMZ) is a 50-member market cap–weighted index made up of energy MLPs. AMZ is broader than the Alerian MLP Infrastructure Index (AMZI), which consists of ~25 MLP stocks and is focused on infrastructure MLPs.

AMZ’s top three components are Enterprise Products Partners (EPD), Energy Transfer Partners (ETP), and Magellan Midstream Partners (MMP), which form 16.6%, 11.3%, and 7.4%, respectively, of the index. Suburban Propane Partners (SPH), TC Pipelines (TCP), EnLink Midstream Partners (ENLK), and AmeriGas Partners (APU) are some of the index’s smaller components. Together, these four MLPs form ~5.2% of AMZ.

Next in this series, we’ll look at the performance of the Credit Suisse X-Links Cushing MLP Infrastructure ETN (MLPN) over the week.

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