Master Limited Partnership ETFs: AMLP vs. MLPX Faceoff on Fees, Returns, and Yield

The Alerian MLP ETF (NYSEMKT:AMLP) provides high dividend yields through a concentrated midstream portfolio, while the Global X - MLP & Energy Infrastructure ETF (NYSEMKT:MLPX) offers lower costs and broader energy infrastructure exposure.

Energy infrastructure investments often focus on master limited partnerships (MLPs) that transport and store oil and gas. While AMLP concentrates specifically on these tax-advantaged structures, MLPX blends MLPs with general energy infrastructure corporations, resulting in distinct risk-reward profiles and tax considerations for income-seeking investors.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.

MLPX is the more affordable option, with an expense ratio of 0.45%, which is notably lower than AMLP’s 1.01%. However, AMLP offers a much higher payout with a 7.6% dividend yield.

Performance & risk comparison

AMLP, launched in 2010, focuses almost exclusively on the energy sector at 98% with 2% in utilities. It maintains a concentrated portfolio of 14 holdings, and its largest positions include Plains All American Pipeline LP (NASDAQ:PAA) at 12.67%, Western Midstream Partners LP (NYSE:WES) at 12.55%, and Sunoco LP (NYSE:SUN) at 12.48%. The fund paid $4.02 per share over the trailing 12 months.

In contrast, MLPX was launched in 2013 and holds 29 positions, providing broader exposure. Its sector mix is 99% energy, and its top holdings include Enbridge Inc (NYSE:ENB) at 9.29%, Tc Energy Corp (NYSE:TRP) at 9.26%, and Williams Cos Inc (NYSE:WMB) at 8.51%. The fund has a trailing-12-month dividend of $3.04 per share.

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Which looks like the better buy

The Alerian MLP ETF (AMLP) and the Global X - MLP & Energy Infrastructure ETF (MLPX) are both exchange-traded funds (ETFs) that focus on master limited partnerships (MLPs) that transport and store oil and gas. Here is how these two ETFs stack up against one another.

First, there’s AMLP. This fund charges a fairly high expense ratio of 1.01%. That means someone who invests $10,000 in the fund should expect to pay $101 in fees annually. By contrast, many popular index funds, such as the Vanguard S&P 500 ETF (NYSEMKT:VOO), charge 0.03% in fees. At any rate, AMLP does boast a huge dividend. The fund has a current dividend yield of 7.6%, generating substantial cash flow for income-oriented investors. Since 2013, AMLP has generated a total return of 70%, equating to a compound annual growth rate (CAGR) of 4.2%. The S&P 500, by contrast, has delivered a total return of 441%, with a CAGR of 14.1%.

Then, there’s MLPX. This fund has an expense ratio of 0.45%. That’s lower than AMLP, but still average compared to the overall ETF universe. The fund also has a stout dividend yield of 4.2%. Like AMLP, MLPX is loaded with MLP stocks. Indeed, it holds nearly 30, roughly twice as many as AMLP. As for performance, MLPX has delivered a total return of 215% and a CAGR of 9.4%.

In summary, these funds have underperformed the S&P 500 by a wide margin. However, for income-seeking investors, both funds offer massive cash flow potential, albeit at a cost. MLPX is the more affordable option due to its lower expense ratio. It has also delivered higher total returns. AMLP offers a hefty 7.6% dividend yield, but it comes at an expense ratio more than double that of MLPX.

Jake Lerch has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Enbridge and Vanguard S&P 500 ETF. The Motley Fool recommends Tc Energy. The Motley Fool has a disclosure policy.