Clean Energy or Pipeline Infrastructure? ICLN and AMLP Are Betting on Different Energy Futures.
Written by Sara Appino for The Motley Fool -> Alerian MLP ETF provides significant income through infrastructure-focused master limited partnerships but carries a substantially higher expense ratio than iShares Global Clean Energy ETF. iShares Global Clean Energy ETF offers bro
Alerian MLP ETF provides significant income through infrastructure-focused master limited partnerships but carries a substantially higher expense ratio than iShares Global Clean Energy ETF.
iShares Global Clean Energy ETF offers broader global diversification across renewable sectors, whereas Alerian MLP ETF is concentrated in North American energy pipelines and storage.
Alerian MLP ETF has demonstrated lower price volatility relative to the broader market and a smaller maximum drawdown compared to iShares Global Clean Energy ETF over recent years.
Investors choosing between iShares Global Clean Energy ETF (NASDAQ:ICLN) and Alerian MLP ETF (NYSEMKT:AMLP) may weigh the clean energy fund's lower costs against the MLP fund's significantly higher dividend yield and lower historical volatility.
Both funds target the energy sector but through vastly different lenses. ICLN focuses on the global transition to renewable power and technology. AMLP focuses on midstream infrastructure, specifically master limited partnerships (MLPs) that transport and store traditional energy products like oil and natural gas.
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.
AMLP is considerably more expensive, carrying an expense ratio more than double that of ICLN. However, for income-focused investors, the Alerian fund provides a much higher payout, with a yield gap of 7.6% percentage points.
Alerian MLP ETF (NYSEMKT:AMLP) concentrates heavily on energy infrastructure, with 98% of the portfolio in the energy sector and 2% in utilities. It holds just 14 positions, making it a highly concentrated bet on midstream assets. Its largest positions include Plains All American Pipeline (NASDAQ:PAA) at 12.67%, Western Midstream Partners (NYSE:WES) at 12.55%, and Sunoco (NYSE:SUN) at 12.48%. The fund was launched in 2010 and paid $4.02 per share over the trailing 12 months.
