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All Major MLP Securities Gained Last Week, but YMLP Fell

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YMLP falls 1.5%

The Yorkville High Income MLP ETF (YMLP) fell 1.5% in the week ended October 2. For context, consider that the broad market SPDR S&P 500 ETF (SPY) rose 1.1%, and the Energy Select Sector SPDR ETF (XLE) rose 2.4% during the week.

Hi-Crush Partners (HCLP), Foresight Energy (FELP), NGL Energy Partners (NGL), and KNOT Offshore Partners (KNOP) were the ETF’s biggest losers during the week. They fell 18.1%, 16.4%, 9.1%, and 9.0%, respectively. The four MLPs account for ~11% of YMLP. HCLP was YMLP’s worst performer in the previous week as well.

While the ETF gained in the later half of the week, it could not fully recover earlier losses and ended the week in the red.

YMLP tracks the Solactive High Income MLP Index, also called the YMLP index. The index fell 1.7% last week. In comparison, the Alerian MLP Index (AMZ) rose 3.9%. This is an index of the sector’s top 50 MLPs.

The Solactive High Income MLP Index is a rules-based index focused on high distribution paying and publicly traded MLPs. Currently, the index consists of 25 MLP stocks.

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Market cap of YMLP holdings

YMLP has a management fee of 0.82% and total net assets of $186 million. The management fee is the fee paid to the manager of the fund—in this case, Yorkville ETF Advisors. 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 riskier than large-cap MLPs. Currently, YMLP trades at a 19.8% yield compared to AMZ’s 7.6% yield. Investors expect higher yields to compensate for higher risks.

Smaller cap MLPs didn’t gain much during the week. This reflects current sentiments of investors who continue to be cautious about MLP investments and are coming back first to the more stable, large-cap segment. 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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