Despite ongoing oil price volatility, midstream master limited partnerships (MLPs) have surprised on the upside, increasing cash distributions by 2% in Q1 2015 and 15% YoY1.
Currently midstream MLPs offer about 5% annual yield2, an attractive rate in a world of near zero interest rates. The investment case for MLP Exchange Traded Products (ETPs) remains robust, with net inflows of US$1.7 billion so far in 20153.
MLPs have the potential to be a ’buy and hold’ solution for many investors. They deliver yield, distributed quarterly, and have shown resilience in the face of a volatile oil price, based on:
While crude oil is down 43% since peaking in June 2014, midstream MLPs are down just 6%4.
MLP capital expenditure growth in Q1 2015 has beaten research analysts’ estimates.
Merger and acquisition activity is expected to continue, potentially at an elevated pace, providing further stimulus for MLP share prices.
With the US continuing to pursue energy independence, we expect the shale oil revolution in the US to continue over the long term, whatever OPEC does in the near term.
Strong Distribution Growth Continues for Midstream MLPs
* Total quarterly distributions in US$ from the current underlying constituents in Solactive US Energy Infrastructure MLP Index over the last seven years, from April 2008 to March 2015. Source: ETF Securities.
ETFS US Energy Infrastructure MLP GO UCITS ETF
Midstream focus: First European listed ETF focused on ’the midstream’ MLP segment
Favourable tax treatment with no taxation at a corporate level. The fund itself is not subject to US dividend withholding and is therefore 100% exposed to the index performance
Transparent and robust ETF structure with intraday liquidity
Competitive pricing, with lowest TER among European MLP ETFs (as of 21 April 2015)
ETFS US Energy Infrastructure MLP GO UCITS ETF is listed on LSE, Borsa Italiana, Deutsche Börse and SIX.
1. Measured by the Solactive US Energy Infrastructure MLP Index between 31 March 2014 – 31 March 2015
2. Measured by the difference of the Solactive US Energy Infrastructure MLP TR Index and Solactive US Energy Infrastructure MLP PR Index between 12 May 2014 – 12 May 2015
3. Source: ETF Securities calculation of global MLP ETPs flows during the period 1 January 2015 – 6 May 2015
4. Crude oil measured by front month WTI crude oil futures and midstream MLPs by the Solactive US Energy Infrastructure MLP Index between 20 June 2014 – 12 May 2015
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