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Investors avoided key energy pipeline fund in September

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Investors avoided key energy pipeline fund in September

Investors pulled money from the oil and gas pipeline industry's largest exchange-traded fund during September as stock prices remained stagnant.

The Alerian MLP ETF, which tracks the index, saw $34.0 million in net outflows in September after a net $83.8 million flowed in during August. The Alerian index gained less than 1% in September on a total-return basis, which includes distribution income, after dropping 5.5% in August.

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Master limited partnerships, which house billions of dollars of U.S. oil and gas pipeline assets, are not taxed at the corporate level but pay relatively high quarterly distributions to stockholders.

CBRE Clarion Securities portfolio manager Hinds Howard said institutional investors' growing discontent with MLPs will weigh heavily on midstream performance for the rest of 2019.

"Anecdotally, last year institutions with 'MLP' allocations addressed weak MLP performance and increased concentration by expanding the universe to include midstream corporations in the U.S. and Canada," Howard wrote in a Sept. 28 blog post. "This year, some of those same institutions are throwing in the towel by officially reducing or eliminating specific allocations to the group."

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A dozen broader energy ETFs tracked by S&P Global Market Intelligence, meanwhile, saw $187.8 million in combined net outflows as the price of West Texas Intermediate crude oil slipped 2% to settle at $54.07 per barrel Sept. 30.

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