Given the relative calm for midstream transactions, it’s a good week to talk midstream benchmarking. As discussed at length here and in more formal whitepapers, MLPs aren’t as dominant in the midstream business as they once were. Tracking performance of the midstream sector, therefore, is no longer as easy as tracking the Alerian MLP Index. A new benchmark is needed.
A few months ago, we added the Alerian Midstream Energy Index (AMNA) to our weekly dashboard and use it as a reference for midstream as a whole, alongside the original Alerian MLP Index (AMZ). More MLP asset managers, we believe the conversation around the appropriate benchmark will accelerate this year, given the disparity in returns among MLPs and corporations. We have thoughts on how those discussions should go, and we put those thoughts into a whitepaper we published this week.
The one sentence summary of the paper is that we believe a broader benchmark that is wholly agnostic to structure is most appropriate and we make the argument that AMNA most closely matches the midstream universe as we see it.
We recognize there are other index providers besides Alerian, but their history, accessible data, range of indexes, relative independence and general cache among investors make their indexes stand out.
We considered other indexes as well, reviewed them and eliminated them for various reasons below. No hard feelings to those companies behind the indexes or the products tracking them.