The Alerian MLP Index suffered a Minsky moment last fall and winter, when plummeting oil prices sparked a wave of indiscriminate selling that was intensified by forced liquidations at funds hit with redemption requests.
But this basket of 50 prominent master limited partnerships (MLP) has rallied by almost 60 percent since the price of West Texas Intermediate (WTI) crude oil bottomed on Feb. 11, 2011, making the group the top performer on a year-to-date basis among the upstream, downstream and services indexes that we track in Energy & Income Advisor.
After successive waves of indiscriminate selling and buying, the easy money has been made in the MLP space; going forward, investors must have a firm grasp on underlying fundamentals to achieve differentiated returns.
We revisit some of the headwinds buffeting midstream operators, including volumetric declines in some basins, the general lull in demand for incremental takeaway after the recent construction boom and the debt hangover from this period of rapid growth.
But we also highlight a handful of growth themes for MLP investors to consider as they position their portfolios for the next few years.
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In October 2012, renowned energy expert Elliott Gue launched the Energy & Income Advisor, a twice-monthly investment advisory that's dedicated to unearthing the most profitable opportunities in the sector, from growth stocks to high-yielding utilities, royalty trusts and master limited partnerships.
Elliott and Roger on Aug. 31, 2020
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