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MLPs Recent Plunge Not Tied to Fundamentals

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The Benefits of Various MLP Investment Vehicles

Whitepaper

Variable Distribution MLP: A Complete Study of Fundamentals, Returns, Risk, and Correlations

4th Quarter 2014

9.5

Stability Score

The Yorkville Distribution Stability Score quantifies the stability of distributions across the MLP asset class by looking at the number of MLPs which increased, maintained, or cut payouts.

 

4th Quarter 2014

5.6%

Growth Score

The Yorkville Intrinsic Distribution Growth Rate measures average year- over-year distribution growth adjusted for seasonality, variable distributions, and distribution cuts for non-operating reasons.

Oil Declines, MLP Fundamentals Don’t

 

As oil prices have declined by 35% to below $70 per barrel following OPEC’s decision to maintain current production at 30 million barrels per day, MLP prices have declined by roughly 10% in value from 11/27 through Monday’s close (12/1). We believe this selling to be driven by market participants who do not fully understand MLP fundamentals. Most MLPs have little to no exposure to oil and/or natural gas prices, meaning cash flows, and therefore distributions, are likely to remain unaffected.

 
Short-Term
Long-Term
Name Ticker WTD MTD QTD YTD
Yorkville MLP Universe IndexYMLPU4.7%-6.9%-13.1%5.5%
Yorkville MLP Commodity Universe IndexYCOMU5.3%-11.3%-25.8%-19.3%
Yorkville MLP Infrastructure Universe IndexYINFU4.7%-6.1%-10.4%11.4%
S&P 500SPX3.0%-0.2%5.0%13.8%

* Annualized Total Returns as of 12/19/2014

 
      Annualized
Name Ticker 1 Year 3 Year 5 Year 10 Year
Yorkville MLP Core Income StrategyMLPC50.5%41.4%33.0%17.7%
S&P 500SPX19.7%23.0%15.7%8.1%

* Total Returns as of 9/30/2014

** Note: MLP Core Income Strategy returns are shown in U.S. dollars gross of fees

Yorkville Capital Management LLC claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. Yorkville Capital Management LLC has been independently verified for the periods 8/31/2006 through 12/31/2007. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS standards. The Yorkville MLP Core Income Strategy has had a performance examination beginning 12/31/2006. The verification and performance examination reports are available upon request.

The MLP Core Income Strategy contains fully discretionary equity accounts. The composite invests primarily in Master Limited Partnerships (MLPs). The investment objective of the strategy is to deliver stable income, growing distribution, and capital appreciation. The inception of the composite is 1/16/07. Performance presented prior to January 17, 2007 occurred while the Portfolio Manager was affiliated with a prior firm and the Portfolio Manager was the only individual responsible for selecting the securities to buy and sell.

Yorkville Capital Management LLC is an independent registered investment advisor. The firm maintains a complete list and description of composites, which is available upon request.