From Barron’s
The folks who created the Alerian MLP Index (AMZ) are celebrating the 10-year anniversary of the index. They are writing blog posts, creating fact-filled brochures and even sent a small box of champagne candies with press materials.
But while they are trumpeting the index and its constituents, they aren’t particularly calling out the total return over that time, which is actually pretty good, considering how rough the past two years have been.
Thanks to the hefty cash distributions paid out to shareholders in master limited partnerships, on a total return basis, the index is up 8.8% in the past 10 years — better than the 5.32% average annualized return of the total stock market over that time period, according to Morningstar.
But on a price basis, the index is up just 20% in total over the past decade. That compares to a 132% cumulative total return in the past 10 years. The 10-year average annual distribution growth of the index is 6.8%.
A look at the index’s total return each year shows how volatile master limited partnerships can be:
- 2006: June 1 launch
- 2007: 12.7%
- 2008: -36.9%
- 2009: 76.4%
- 2010: 35.9%
- 2011: 13.9%
- 2012: 4.8%
- 2013: 27.6%
- 2014: 4.8%
- 2015: -32.9%
- 2016 year to date: 9.1%
