Follow the Leader: MLP Bonds

 

MLP equity prices are down 5.6% including distributions this year, while Yorkville’s index of MLP and midstream debt has produced a positive total return of 5.8%. Yorkville believes the equity markets may be getting it wrong and the debt market may be right.

2Q17 MLPs: Sentiment v. Fundamentals

Yorkville explores the battle between strong fundamentals and extremely negative sentiment surrounding the energy sector and provides our outlook for MLPs for the balance of 2017.

Yorkville MLP Indexes
(as of 10/20/2017)
ScoresPerformance
StabilityGrowthMTDYTD
MLP Segments/Styles
Universe9.01.7%-2.9%-5.7%
Infrastructure9.26.7%-3.3%-6.0%
Commodity8.5-5.5%0.5%-3.9%
Large Cap%
Growth%
MLP Sectors
Crude Oil Pipeline8.22.9%-5.1%-23.2%
Downstream9.0-4.6%-0.2%-0.2%
Energy Services6.0-19.7%0.2%-25.0%
Exploration & ProductionN/AN/A%0.0%-1.6%
Gathering & Processing9.24.9%-2.2%2.7%
General Partners10.019.2%-3.0%-4.1%
Marine Transportation8.9-8.1%1.4%7.2%
Natural Gas Pipelines9.13.9%-2.9%-5.1%
Natural Resources8.8-1.3%1.6%-11.6%
Refined Product Pipeline10.010.3%-5.2%-6.4%
MLP Growth Opportunities Strategy - Performance
 
    Annualized  
Name 1
Year
3
Year
5
Year
Since
Inception+
Yorkville MLP Growth Opportunities Strategy (Gross)(1) 6.7%-13.2%7.7%11.1%
Yorkville MLP Growth Opportunities Strategy (Net) (2)4.5%-13.9%5.6%8.9%
Alerian MLP (3)0.4%-11.2%1.8%10.4%
S&P 500 (4)17.9%9.6%14.6%7.1%

+ Since Inception: January 1, 2002

Past Performance is not indicative of future returns.

MLP High Income and Energy Infrastructure Strategies - Performance
 
Name QTD YTD 1 Year Since
Inception+
Yorkville MLP High Income Strategy (Gross) (1) -5.2%-1.2%25.6%15.7%
Yorkville MLP High Income Strategy (Net) (2) -5.4%-1.9%21.6%12.6%
Yorkville Energy Infrastructure Strategy (Gross) (1) -10.9%-8.8%10.3%1.2%
Yorkville Energy Infrastructure Strategy (Net) (2) -11.3%-9.5%7.3%-1.7%
Alerian MLP (3) -6.4%-2.7%0.4%16.7%
S&P 500 (4) 3.1%9.3%17.9%6.7%

+ Since Inception: October 1, 2015

Past Performance is not indicative of future returns.

Yorkville Capital Management LLC claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with GIPS® standards. Yorkville Capital Management, LLC is a Registered Investment Advisor dedicated to investing in master limited partnerships (MLPs) and U.S. energy infrastructure companies. Yorkville’s investment team is comprised of pioneers in researching and investing in MLPs. The Yorkville team has been successfully investing in U.S. energy infrastructure through MLPs since the early 1990s – virtually the inception of the asset class. Yorkville’s management team has over 60 years of combined experience in the MLP market.

The Yorkville MLP Growth Opportunities Strategy Composite contains fully discretionary equity accounts. The accounts are invested in the Yorkville MLP Growth Opportunities Strategy. The MLP Growth Opportunities Strategy was known as the MLP Core Income Strategy prior to January 1, 2017. The Yorkville MLP High Income Strategy Wrap Composite contains fully discretionary equity accounts. The accounts are invested in the Yorkville MLP High Income Strategy through a wrap program. The Yorkville Energy Infrastructure Strategy Composite contains fully discretionary equity accounts. The accounts are invested in the Yorkville Energy Infrastructure Strategy.

1  Gross-of-fees returns are pure gross-of-fee returns which do not reflect the deduction of a management fee, commissions, and certain transaction cost which will reduce performance.

2  Net of fee returns are calculated by deducting a wrap fee of 3.0% from the monthly gross composite return. The management fee was increased from 1.0% and the high water mark added on January 1, 2017. Net of fee returns for the Yorkville MLP High Income Strategy are calculated by by deducting the highest fee of 1.50% from the monthly gross composite return. The fee schedule is as follows: 1.50% management fee and 10% performance fee above 10% hurdle with a high water mark. Net of fee returns for the Yorkville Energy Infrastructure Strategy are calculated by by deducting the highest fee of 1.50% from the monthly gross composite return. The fee schedule is as follows: 1.50% management fee and 10% performance fee above 10% hurdle with a high water mark.

3  Alerian MLP Index is the leading gauge of energy Master Limited Partnerships (MLPs). The float-adjusted, capitalization-weighted index, whose constituents represent approximately 85% of total float-adjusted market capitalization, is disseminated real-time on a price-return basis (AMZ) and on a total-return basis (AMZX).

4  The S&P 500® Index is a broad-based measurement of changes in stock market conditions based on the average performance of 500 widely held common stocks.

Standard Deviation measures the risk or volatility of an investment’s return over a particular time period; the greater the number, the greater the risk.

This information has been provided by Yorkville Capital Management, LLC. All materials presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. This is not to be construed as an offer to buy or sell any financial instruments and should not be relied upon as the sole factor in an investment-making decision. The views and opinions expressed are those of the portfolio management team at the time of publication and are subject to change. There is no guarantee that these views will come to pass. As with all investments there are associated inherent risks. Please obtain and review all financial material carefully before investing. Past performance is not indicative of future returns.

For a GIPS® compliant presentation contact Yorkville Capital Management, LLC at (212) 755-1970 or info@yorkvillecapital.com.