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YMLP Underperformed AMZ in the Week Ending September 11

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Sep. 15 2015, Published 12:59 p.m. ET

YMLP 

The Yorkville High-Income MLP ETF (YMLP) fell 4.90% in the week ending September 11. For context, consider that the broad-market SPDR S&P 500 ETF Trust (SPY) rose 2.10% and the Energy Select Sector SPDR ETF (XLE) fell 0.70% during the week. USA Compression Partners (USAC), Atlas Resource Partners (ARP), Hi-Crush Partners (HCLP), and Foresight Energy (FELP) were the ETF’s biggest losers during the week. They fell 15.80%, 14.60%, 12.40%, and 11.80%, respectively, during the week.

YMLP tracks the Solactive High-Income MLP Index. It’s also called the YMLP index. The index fell 5.10% in the week. In comparison, the Alerian MLP Index (AMZ) fell 4.30%. It’s an index of the sector’s top 50 MLPs.

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The YMLP index

The Solactive High-Income MLP Index is a rules-based index focused on high distribution paying and publicly traded MLPs. The index’s constituents are selected based on certain criteria relating to current distributions, coverage ratio, and historical distribution growth. Currently, the index consists of 25 MLP stocks.

YMLP’s portfolio is diverse. Of the MLPs in YMLP, 30% are involved in marine transportation, 25% provide energy services, and 20% are exploration and production MLPs. Downstream MLPs account for 17% of YMLP’s holdings.

YMLP 

YMLP has a management fee of 0.82% and total net assets of $186 million. Navios Maritime Partners (NMM), Calumet Specialty Products Partners (CLMT), Seadrill Partners (SDLP), NGL Energy Partners (NGL), and Teekay Offshore Partners (TOO) are the ETF’s top holdings. Together, these five MLPs account for ~30% of YMLP.

The average company size by market capitalization in YMLP’s portfolio is $1.3 billion. The portfolio’s holdings range from $530 million to $3.2 billion in market capitalization. In comparison, AMZ’s constituents’ average size by market capitalization is $12 billion. Smaller-cap MLPs are generally considered to be riskier than large-cap MLPs. Currently, YMLP trades at an 18.30% yield compared to AMZ’s 7.20% yield. Investors expect higher yields to compensate for higher risks.

The above graph compares YMLP’s performance over the last week with those of its underlying index—the YMLP index, AMZ, and XLE. All of the returns include dividends.

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