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ALPS Alerian MLP ETF

By Edited Dec 4, 2015 0 0

 

ALPS Alerian MLP is an exchanged traded fund that invests in American energy master limited partnership(MLP) companies. By investing in MLP companies such as Energy Transfer Partners L.P, the fund is able to capitalize on the booming natural gas drilling business. ALPS Alerian MLP has a ticker symbol of (AMLP) and it invests solely in MLP's. Investors are draw to this ETF due to the fact that to invest directly in MLP's, have have significant tax implications. This is why many people invest in AMLP.

 

AMLP is a pretty big fund with roughly 4 billion dollars in assets. The fund has a dividend yield of 6%. The currently is trading at around it's net asset value. The fund invests 100% of their money in stocks and out of those stocks all of them are mater limited partnerships. Below I have listed the names of their top ten holdings and I have listed the percent of their portfolio in each of these holdings.

 

  • Enterprise Products Partners, L.P -------9.76% of assets
  • Kinder Morgan Energy Partners,  L.P---9.51% of assets
  • Plains All American Pipeline, L.P--------7.01% of assets
  • Magellan Midstream Partners, L.P------6.93% of assets
  • Energy Transfer Partners, L.P.----------6.86% of assets
  • ONEOK Partners, L.P. ------------------6.80% of assets
  • Enbridge Energy, L.P. -------------------4.95% of assets
  • Buckeye Partners L.P.--------------------4.89% of assets
  • MarkWest Energy Partners, LP----------4.64% of assets
  • Williams Partners L.P.--------------------4.55% of assets

Most of these companies are medium sized companies. Out of all of these master limited partners, Energy Transfer Partners is my favorite, and as a 6.86% share of assets. The company has solid earnings and I am reassured to see that it is in this funds portfolio. Looking at all of these companies, I am confident, that the managers of this fund are doing a very good job. All of these companies are in a position to grow and capitalize off of natural gas and oil drilling in the U.S.

  One thing about ALPS Alerian MLP ETF to consider is the fact that the fund charges a 0.85% Annual Report Expense Ratio. This may not seem to be a big deal, compared the the category average of 0.57%, Alerians ratio is a little high.  This fund was created in April of 2010 and is still considered a new fund. With a 1 year return of around 6%, I am a little disapointed with it's high expense ratio. In order to justify such a rate, I expect at least a 8% retunr on investment.

 

My Review

I recommend investing in AMLP. I think it is a great fund, and can perform as well if not better than investing directly in MLP's. If you want to capitalize on the growth of natural gas/oil drilling in the U.S, than buy some shares of AMLP. Currently the fund is only selling for a few dollars more than it's net asset value. The S&P 500, has outperformed AMLP for a few years, but it is my hope that in the future, AMLP will perform better and make more money. If you feel, that you would be better suited, to invest directly in MLP's despite their tax implications, than I recommend checking out Boardwalk Pipeline Partners, LP. The company is currently performing very well and is growing at a huge rate. Most of it's pipelines are located in Louisiana, and they stretch all the way up to Ohio. It has a low beta of just .23 and even has a nice 7% dividend yield.

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