Morningstar said Thursday that it has created two MLP-focused indexes, the Morningstar Composite Index and the Morningstar MLP Focus Index, which track energy master limited partnerships (MLPs).
According to the research firm, the composite index targets the top 97% of all publicly traded energy MLPs by market capitalization, while the focus index comprises 20 high-quality MLPs that are trading at the most favorable risk-adjusted prices relative to what Morningstar’s equity research analysts believe they’re worth.
“We’re launching the Morningstar MLP Indexes to offer investors benchmarks that they can use to compare, select and monitor their investments to help them make better investing decisions,” said Sanjay Arya, senior vice president of Morningstar Indexes, in a press release.
According to Morningstar analyst Jason Stevens, MLPs have “been on a tear this year.” The Morningstar MLP Composite Index was up 37% year to date on Wednesday, compared with the 11% gain on the S&P 500. And the MLP Focus Index has risen 40% year to date.
Energy master limited partnerships engage in the transportation, treating, processing, refining, storage, marketing, exploration and production of natural resources. MLPs are asset-heavy, capital-intensive businesses that tend to enjoy partial structural monopolies.