Against a backdrop of higher oil prices and flat market returns, the midstream master limited partnership sector's leading exchange-traded fund still saw net outflows in July.
The Alerian MLP ETF posted net outflows of $34.6 million, a $61 million reduction from June's net outflows of $95.4 million. West Texas Intermediate crude oil edged higher during July to close at $49.16 per barrel on the last day of the month, up almost 7% over the June 30 settle price. The Alerian MLP index, which tracks the major pipeline MLPs and is the basis for the ETF, was flat for the month.
The other 10 midstream-focused ETFs tracked by S&P Global Market Intelligence, meanwhile, saw more than $100 million in inflows in July, for an overall total of $68.3 million in inflows among the 11 funds. In June, the group of ETFs saw $4 million in net inflows.
Investor interest in a dozen broader energy funds tracked by S&P Global Market Intelligence declined steeply, with net outflows ballooning from $9.5 million in June to $393 million in July.
"Fund flows are being re-circulated rather than expanding overall," CBRE Clarion Securities analyst Hinds Howard wrote in an Aug. 6 blog post. "With the sector on firmer footing than it has been in recent years, the capital recycling is not a 're-arranging the deck chairs on the Titanic' situation, but the overall dearth of fund flows will likely drive consolidation longer term as MLPs able to access capital markets grind away [at] those with high cost of capital."