In Alerian’s efforts to help investors make informed decisions about MLPs and energy infrastructure, it highly prioritizes objective, transparent, and useful research. Below are the long-form white papers written as a result of these efforts. Additional research can be found in Alerian Insights.
The Case for Energy Infrastructure in Your Portfolio
- Pipelines are widely considered the cornerstone of energy infrastructure. Because revenues are largely based on fees, whether from pipelines, storage facilities, or processing plants, energy infrastructure companies tend to generate stable cash flows, which support attractive dividends.
- For investors, energy infrastructure provides income, diversification, real asset exposure, and growth potential. Energy infrastructure also offers attractive qualities relative to a broad energy investment.
- Current valuations compare favorably with history and relative to other sectors.
- From a portfolio construction standpoint, energy infrastruct ure can fit within an energy, income, real assets, or equity growth sleeve.
Why Yesteryear’s Valuation Metrics Aren’t Sufficient for Today’s MLP
The MLP space has changed significantly in recent years with consolidations, distribution cuts, a shift away from raising equity, and a focus on positioning for sustainability instead of growth. The evolution of MLP business models requires a fresh approach to MLP valuation metrics. This piece explores historical valuation metrics and the valuation tools that are expected to become more prevalent going forward as MLPs increasingly compete with other sectors for generalist investor dollars.
Revisiting MLP Performance as Interest Rates Rise
As the 10-year Treasury yield rises to levels not seen in years, it is worthwhile to revisit MLP performance in rising interest rate environments, and particularly how MLPs have performed compared to other yield-oriented investments. Specifically, we look at how MLPs have performed in rising rate environments since 2013 and key differences with the current environment that could have a bearing on MLP performance as rates increase.
US LNG Export Growth and the Benefits to Midstream
The US is on the brink of adding significant liquified natural gas (LNG) export capacity in 2019 and becoming a sizable player in the global LNG market. Additional export capacity will likely be needed to fill a looming global supply gap in the mid-2020’s. Within the US, midstream companies have a vested interest in seeing LNG export capacity grow, as LNG exports increase infrastructure demand and extend the runway for US natural gas production growth.
Storage Oil Backwardation and Implications for MLPs
While oil storage assets play an important role in the energy value chain, they are not often in the spotlight. That is until the oil curve shifts into backwardation. With the oil curve backwardated, storage assets tend to garner more attention given the risk of lower utilization and re-contracting risk. In this piece, we discuss storage, oil curve backwardation, and the implications for MLPs with oil storage capacity.
The Evolution of MLP and Energy Infrastructure Products
Since 2004, when the first MLP closed-end fund launched, there have been 112 MLP products issued in the form of ETFs, ETNs, mutual funds, and closed-end funds. The MLP product landscape continues to evolve and today, there are 94 MLP products remaining. This whitepaper walks through this evolution and provides context for where the market may be shifting to next.