The Irish-domiciled ETF, the Alerian Midstream Energy Dividend UCITS ETF (MMLP) is benchmarked to the Alerian Midstream Energy Dividend Index (AEDW) and will list on London Stock Exchange later this month.
High income-yield characteristics
US-based Alerian is the world leader in North American energy infrastructure indexing and research, pioneering how the MLP asset class is measured and creating the most widely used real-time benchmark for midstream MLPs – the Alerian MLP Index. As of 30th June, 2020, Alerian had a 75.8% AuM market share for US-listed passive MLP exchange traded products.
Midstream energy infrastructure companies, including MLPs and C-corporations, generate fees by transporting, processing, and storing oil, natural gas and natural gas liquids, driving stable cash flows. The midstream sector has attracted investors due to its high income-yield characteristics, particularly among MLPs.
The launch of MMLP demonstrates European investors’ interest in exposure to North American midstream energy infrastructure. We are excited about our partnership with HANetf and our joint innovation to answer investors’ call for yield and income.
David LaValle, CEO at Alerian
A defense & diversification play
With a historic 5 year average yield of 7.25% for the Alerian Midstream Energy Dividend Index, which MMLP tracks, midstream energy infrastructure compares favorably to infrastructure and energy assets as well as other income strategies while often performing more defensively during periods of energy price declines.
MMLP also addresses a significant gap in mainstream US equity holdings as MLPs are not included in broad US equity market indexes and midstream corporations only represent a small portion of major US equity indices. The inclusion of Canadian midstream corporations provides an added layer of diversification and defensiveness. The launch of MMLP offers a rare gateway for European investors into the North American midstream market via a diversified, rules-based, dividend-weighted index strategy from the leaders in energy infrastructure and MLP indexing and research, Alerian.
The North American energy infrastructure market represents a favourable investment opportunity. With the onset of the coronavirus crisis and the recent collapse in energy prices to levels never seen before, midstream energy companies have been trading at historically big discounts. With the expectation that the global economy will gradually lift lockdown restrictions and reopen for business, and as shale production and energy demand recover to pre-crisis levels, midstream energy companies offer an attractive risk-return opportunity to investors. MMLP will be an excellent way to invest in that opportunity.”
Hector McNeil, co-CEO of HANetf
