Credit Suisse’s MLPN ETN Underperformed the MLPI ETN Last Week




The Credit Suisse X-Links Cushing MLP Infrastructure ETN (MLPN) fell 3.3% in the week ended September 4. In comparison, the ETRACS Alerian MLP Infrastructure Index ETN (MLPI) and the JPMorgan Chase Alerian MLP Index ETN (AMJ) both fell 2.7% over the same timeframe.

The broad-market SPDR S&P 500 ETF Trust (SPY) fell 3.4% and the Energy Select Sector SPDR ETF (XLE) fell 3.0% during the week. MLPN traded at a yield of 6.1% at the end of last week.

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The Cushing 30 MLP Index

The MLPN ETN tracks the Cushing 30 MLP Index. The Cushing 30 MLP Index is an equal-weighted index focused on midstream MLPs. It uses a formulaic valuation methodology to rank MLPs for inclusion in the index. The methodology focuses on financial performance instead of market capitalization. The MLPs in the index are reset to an equal weight in the fund’s portfolio every quarter.

The index only tracks midstream MLPs. It doesn’t hold upstream and downstream MLPs, which are generally considered more sensitive to commodity prices. The Cushing 30 MLP Index fell more than the Alerian MLP Index (AMZ), which is a broader index of MLPs, including upstream and downstream MLPs. It also fell more than the Alerian MLP Infrastructure Index (AMZI), which only tracks midstream MLPs. We discussed these in the previous parts of this series.

This is the third straight week of MLPN’s underperformance compared to both AMJ and MLPI. Over the last 12 months, MLPN has generated -31% total returns, similar to AMJ’s. MLPI’s 12-month returns are -28%. The above graph compares MLPN’s returns for the week with those of its underlying index, MLPI, and AMJ.

Index components

Alliance Resource Partners (ARLP), Ferrellgas Partners (FGP), Western Gas Partners (WES), and EnLink Midstream Partners (ENLK) are some of the midstream MLP constituents of the Cushing 30 MLP index. Together, these four MLPs form ~13.3% of the index.

The top losers among the index’s constituents in the week ending September 4 included NGL Energy Partners (NGL), Enbridge Energy Partners (EEP), Enterprise Products Partners (EPD), and Sunoco Logistics Partners (SXL), which fell 7.8%, 6.3%, 4.8%, and 5.0%, respectively, during the week.


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