Unloved Pipeline ETFs Find Buyers Again After Big Buyout

(Bloomberg) -- Investors rushed back into the world's largest exchange-traded fund tracking the pipeline industry following the announcement on Aug. 1 that Energy Transfer Equity LP, the parent of Kelcy Warren's U.S. empire, was buying out sister company Energy Transfer Partners LP for $27.5 billion.

The $10.4 billion Alerian MLP ETF, known by its ticker AMLP, took in almost $36 million on Thursday, its first inflows since June. The fund tracks master limited partnerships, which combine the tax treatment of a partnership with a publicly traded firm. They're particularly popular in cash-intensive businesses, like pipelines.

The ETF's largest holding is Energy Transfer Partners, which comprises 11.6 percent of its exposure. The fund lost a record $636 million in assets in July, as energy firms battled to cut distributions to shareholders in order to stabilize their balance sheets and simplify their operations.

Announcement of the Energy Transfer deal came sooner than analysts expected, but the move is “what we've all been waiting for,” Stifel Nicolaus & Co. analyst Selman Akyol wrote in a note to clients.

Other MLP funds also got a piece of the action amid this week's headlines. The Global X MLP ETF, or MLPA, had $29 million in trading volume on Thursday, the most since April and four times the average daily turnover for the past year. Energy Transfer is its largest holding, accounting for 11 percent of portfolio.

To contact the reporters on this story: Carolina Wilson in New York City at cwilson166@bloomberg.net;Michael Bellusci in Toronto at mbellusci2@bloomberg.net

To contact the editors responsible for this story: Courtney Dentch at cdentch1@bloomberg.net, Eric J. Weiner, Andrew Dunn

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