AMUB

UBS Investment Bank today announced coupon payments for the ETRACS Alerian MLP Index ETN Series B (NYSE Arca: "AMUB"), traded on the NYSE Arca.

It has not been a good decade for MLP investors. Even with double-digit yields, total returns on the sector are at -4% annualized going back to 2010.Alerian’s Stacey Morris believes that’s all about to change as 2021 will see meaningful growth in MLP free cash flow for the first time in years.ALPS' Paul Baiocchi also joins the conversation and goes under the hood of his firm’s 2 Alerian MLP ETFs, AMLP and ENFR.The central question in all of this: After years of underperformance, are MLP ETFs finally poised for some positive mean reversion?

In contrast to the prior midstream business model that emphasized a grow-at-all-costs mentality reflected in both dividends and capital spending, midstream has been shifting to a more sustainable growth model that is not dependent on raising equity for funding.The upshot of pressured equity performance blended with resilient EBITDA estimates is significantly discounted EV/EBITDA valuations for midstream companies relative to history, creating the opportunity for capital appreciation as multiples expand.Rather than enjoying yield alone, midstream investors can benefit from total return as a result of the more balanced approach taken by midstream companies, the potential for capital appreciation, and possible shareholder-friendly returns as free cash flow generation takes hold.

While energy companies across the sector are pounding the table on free cash flow, midstream has a distinct advantage over its counterparts when it comes to the predictability of free cash flow and the generous income on offer.In contrast with other energy sectors, midstream’s more predictable cash flows allow for a greater degree of confidence in free cash flow generation regardless of the commodity price environment.Midstream’s fee-based cash flows tend to support more predictable income for investors, whereas oil and gas producers are increasingly discussing variable or special dividends.

Passive exchange-traded products seek to replicate the performance of their underlying indexes, are publicly traded and transparent about holdings, and generally have lower fees and less turnover. In contrast, actively managed funds seek to outperform their benchmark index through skilled research.Active funds show similarity to their benchmark indexes given some overlap in constituents due to a limited investment universe as well as relatively high correlations and other tracking metrics.While the aim of active investing to consistently outperform a market benchmark on a risk-adjusted basis is enticing, many midstream funds fail to consistently generate superior returns after fees over the long term.

UBS Investment Bank today announced coupon payments for the ETRACS Alerian MLP Index ETN (NYSE Arca: "AMU") and ETRACS Alerian MLP Index ETN Series B (NYSE Arca: "AMUB"), both traded on the NYSE Arca.