The Cushing® 30 MLP Index (Ticker: MLPX) is a North American Energy Infrastructure equal weighted index comprised of 30 publicly traded stocks that hold midstream energy assets. Swank Energy Income Advisors, creator of the Cushing® 30 MLP index, has enlisted S&P Custom Indicies to calculate and maintain the index. The index is rebalanced quarterly by S&P Custom Indicies.
Standard & Poors Case Study - Cushing® 30 MLP Index
Why investors want exposure to MLPs
MLPs are natural resource-based companies that own, build and maintain the energy infrastructure (pipelines, storage facilities, gathering systems and processing plants) of North America. They are an attractive asset class for many investors, providing stable income, inflation protection and high total return prospects. The business model of a typical MLP takes advantage of a high barrier to entry, little economic sensitivity and continued demand for the products and services due to overall energy demand.
The Cushing® 30 MLP index is designed and constructed to allow investors a benchmark with an effective and realistic way to gain exposure to the MLP sector.
Cushing® 30 MLP Index by Swank Energy Income Advisors
The Cushing® 30 MLP Index (Ticker: MLPX) is an equal-weighted index that uses an objective, formula-based, proprietary valuation methodology to rank the Master Limited Partnerships (MLPs) for inclusion in the index. The Cushing® 30 MLP index provides a benchmark to measure the performance of the more stable and widely held energy infrastructure MLPs, providing investors an efficient means to gain exposure to the MLP sector.
Whereas other MLP indices are subject to market-cap biases and higher commodity sensitivity, the design and construction of the Cushing® 30 focuses on metrics that drive returns.
The Cushing® 30 is calculated by Standard & Poor's using the methodology set out by Swank Energy Income Advisors. To be eligible for the index, a company must be structured as an MLP and be primarily engaged in natural resource-related business, such as transportation, storage, gathering and processing. In addition to meeting numerous financial criteria outlined in Swank Energy's proprietary valuation system, the company must be publicly traded and currently pay a distribution.
The index will be disseminated real-time on a price return basis and quoted under the ticker symbol "MLPX". The corresponding total return index is calculated on an end-of-day basis and will be disseminated daily through its ticker symbol, "MLPXTR".
Cushing® 30 MLP Index- a better investment alternative for exposure to MLPs
- Formula-based system (SValuES© ) emphasizes earnings and dividends, or in the case of MLPs cash flow and cash distributions, which are the real drivers of stock price performance
- Equal-weighting allows investors to automatically dollar-cost-average because the index will buy more of the MLPs that fall in stock price and sell what MLPs have increased in stock price
- Market cap indices value equity only on the stock price performance, which may not have a tangible link to the health or value of a company
- The Cushing® 30 MLP Index will have no exposure to the highly commodity sensitive and more volatile upstream and shipping MLPs
- More representative of an "investable" portfolio; the market cap weighted Alerian MLP index (Ticker: AMZ) has almost 50% weighting in 5 companies (1)
- Offers a better investment alternative to investors who are seeking exposure to the MLP asset class