The Alerian MLP ETF
The Alerian MLP ETF (AMLP) fell 2.94% in the week ended September 11. The ETF tracks an index of 23 midstream MLP companies.
MLPs are special companies that pay most of their earnings as distributions to unitholders. To understand MLPs better, check out our Primer on MLPs. AMLP is an easy way for investors to gain low-cost, diversified exposure to the midstream sector. Midstream companies help transport, process, and store energy.
AMLP fell the most in the comparable group of securities we’ve been discussing in this series, while the broad market SPDR S&P 500 ETF (SPY) fared the best in the week ended September 11.
Among AMLP’s holdings, the biggest losers were Crestwood Midstream Partners (CMLP), Plains All American Pipeline Partners (PAA), and Western Gas Partners (WES), which fell ~12.58%, 9.68%, and 8.7%, respectively, in the week ended September 11. These companies combined make up roughly 11% of AMLP.
AMLP holds midstream MLPs whose earnings are typically linked to their transported volumes of energy products. Many of them enter into long-term fixed-fee contracts with their customers. This makes them more resilient to slumps in energy prices than their upstream and integrated peers.
Because investors typically buy MLPs for their regular income via distributions, MLP units are also affected by movements in interest rates. Check out our weekly MLP indicator series. You can read the latest report at Energy MLP Indicators: Last Week’s Must-Know Updates.
Usually, AMLP is among the safer bets for investors to play energy prices. Read What you need to know about investing in the Alerian MLP Index for more detail.