The Early Bird - Stock of the Day

Alerian MLP ETF (AMLP)

$52.13

+$0.23 (+0.4%)

Market Cap: $9.38B

About Alerian MLP ETF

ALERIAN MLP ETF seeks investment results that correspond (before fees and expenses) to the price and yield performance of its underlying index, the Alerian MLP Infrastructure Index (the Index). The Index is a rules based, modified capitalization weighted, float adjusted index intended to give investors a means of tracking the overall performance of the United States energy infrastructure Master Limited Partnership (MLP) asset class.

The Index is comprised of 25 energy infrastructure MLPs. The fund will invest at least 90% of its total assets in securities, which comprise the Index (or depositary receipts based on such securities). ALPS Advisors, Inc. is the investment adviser to the fund.

Alerian MLP ETF Bull Case

Here are some ways that investors could benefit from investing in Alerian MLP ETF:

The Alerian MLP ETF recently hit a new 52-week high, indicating strong momentum and investor interest, which can be a positive signal for potential returns.
With a current stock price of approximately $41.06, the fund has shown a 23% increase from its 52-week low, suggesting a recovery and growth potential in the energy infrastructure sector.
The ETF invests at least 90% of its total assets in securities that comprise the Alerian MLP Infrastructure Index, providing investors with diversified exposure to 25 energy infrastructure MLPs, which can help mitigate risk.
As a rules-based index, the Alerian MLP Infrastructure Index is designed to track the overall performance of the energy infrastructure MLP asset class, offering a transparent investment strategy.
Managed by ALPS Advisors, Inc., the fund benefits from professional management, which can enhance investment decisions and performance tracking.

Alerian MLP ETF Bear Case

Investors should be bearish about investing in Alerian MLP ETF for these reasons:

Despite recent gains, the energy sector can be volatile, and MLPs are particularly sensitive to fluctuations in energy prices, which could impact future performance.
The fund's focus on energy infrastructure MLPs may expose investors to sector-specific risks, such as regulatory changes or shifts in energy policy.
Investors should consider the fees and expenses associated with the ETF, which can erode returns over time, especially in a competitive investment landscape.
Market conditions can change rapidly, and while the ETF has performed well recently, past performance is not always indicative of future results.
As the fund is heavily weighted towards a specific asset class, it may lack the diversification benefits that come from a broader investment strategy, potentially increasing risk.

3 Energy ETFs That Could Power Big Gains This Year

Written By Nathan Reiff on 1/27/2025

Image of financial data and graph over landscape with wind turbines. Ecology, green energy, eco power, finance and economy concept digitally generated image. — Photo

As crude oil enters 2025 in an elevated range due to increasing global energy demands and many new investments in offshore production, energy stocks could be due to rise. Energy firms had a lackluster year in 2024, but a renewed focus by the new administration on incentivizing an increase in energy production by loosening regulations over drilling on federal lands could help boost the sector. If OPEC restrains production, as many analysts expect, it could also lead to higher oil prices and a boon for energy firms.

As an investor in the energy sector, it can be difficult to surmise which specific companies are most likely to benefit from these national and global trends. One approach for those broadly bullish on the energy sector in 2025 is to instead cast a wide net via an energy exchange-traded fund (ETF). These funds can offer exposure to a swath of the energy sector without requiring an investor to make specific stock picks.

Three energy funds, in particular, might be poised for a strong year for a variety of reasons. Keep in mind, though, that there are dozens of energy ETFs available in the United States, including a wide variety of focuses, risk levels, and portfolio types.

Alerian MLP: Targeted MLP Play, Impressive Returns

In the past year, as of January 23, 2025, the Alerian MLP ETF (NYSEARCA: AMLP) has returned an impressive 29.55%, beating the broader market and many other energy funds. This ETF focuses on midstream MLPs, or master limited partnerships, pass-through entities that invest in midstream infrastructure and which typically provide a steady income stream and tax advantages to investors.

Alerian's MLP ETF specifically targets MLPs earning 50% or more of EBITDA from assets that aren't directly exposed to changes in commodity prices. Theoretically, this should provide increased stability over other energy sector companies, some of which are closely correlated to commodity prices.

For its specialized focus, investors will pay a premium to invest in AMLP. The fund has an expense ratio of 0.85%, higher than many alternatives in the space. Still, its strong asset base of $10.6 billion and 1-month average trading volume of 1.6 million should provide ample liquidity for investors looking to gain easy, steady exposure to MLPs. The fund's impressive dividend yield of 5.6% is an added bonus for investors looking for steady passive income.

InfraCap MLP: Leveraged Play on MLPs

The InfraCap MLP ETF (NYSEARCA: AMZA) is a similar play to AMLP above, although it is actively managed. AMZA also focuses on midstream MLPs, with a particular emphasis on those companies with high current income. AMZA employs leverage in the range of 20-30%, options strategies to boost income, and MLP beta.

For its differences in approach to AMLP, AMZA actually shares many of the same portfolio elements, including leading MLPS like Plains All American Pipeline, L.P. (NYSE: PAA) and Energy Transfer LP (NYSE: ET) among its top constituents.

However, its more aggressive, slightly higher-risk strategy has led AMZA to beat AMLP's returns over the last year. During that period, AMZA has returned 43.5%. It also enjoys a dividend yield of 5.1%, making it a great choice for investors looking for stable income potential in an energy ETF.

Energy Select SPDR Fund: A Timeless Energy Play

The Energy Select Sector SPDR Fund ETF (NYSEARCA: XLE) is a benchmark for the broader energy sector in the United States. This large-cap fund tracks about two dozen major energy firms in the United States and enjoys more than $35 billion in managed assets. Liquidity will likely never be an issue with this fund, as its status as the go-to energy ETF ensures that it has millions of trades each month.

XLE underperformed the other two funds above, with just under 18% gains in the year up to January 23, 2025. However, it comes in well below both of those ETFs when it comes to fees—XLE has one of the lowest expense ratios in the sector at just 0.09%. This makes it an excellent choice for investors looking to execute a broad lean toward the energy business when the sector is thriving.

There are two things that investors might keep in mind before jumping into XLE, however: first, the fund's portfolio does not include smaller firms or non-U.S. companies, meaning it maintains a focused approach on a key portion of the U.S. energy market; second, the largest names in the portfolio often represent a sizable portion of assets, so XLE is not for investors looking to weight positions more equally.