Monthly MLP Status Update

Because the end of the month fell on a Monday, I wanted to update the current state of the Alerian MLP Index before fresh December volatility steals the focus in our next weekly update.

In November the MLP Index declined 8.1%, including distributions, erasing almost all the gains from October and pushing year-to-date total return back below 30%. For the quarter, the index was still positive at 11/30, but MLPs will need to finish December (after today) slightly positive to finish 4Q in the green.

Status Update_11-30-15

December has been a mixed month for performance over the years, with 12 positive and 7 negative years and average returns over the last 19 years of 1.0%. With investors looking ahead to January, it’s possible that MLPs could catch an optimistic bid ahead of year end.  MLPs had a rough start to December, down more than 1.5% today in a positive broader market and generally benign commodity price backdrop.

MLP sentiment feels slightly better than the end of September, but selling continues as earnings season didn’t do enough to calm distribution sustainability, counter party risk and volume decline fears.

The first 11 months of this year have been nearly as bad as 2008, the worst year ever for MLPs. With a monthly return number for December like the one we just posted for November, MLPs would post their worst year of returns ever in 2015. Over the last 15 years, as shown below, MLPs have only had 2 negative return years. 2015 will be the third.

11-30 Returns

Poll Question: MLPs and S&P500

There is no doubt 2015 will go down as the worst year ever for MLPs relative to the S&P 500, making the MLP collapse tougher to swallow.  Given that backdrop, and the clear breakdown of broader market correlation with MLPs, we offer you the following opportunity to express your early opinion on how 2016 will play out for MLPs relative to the S&P 500.

Assuming oil prices stay within 10% +/- of current levels throughout 2016, MLPs will:

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Category MLP Market Post