April 2025
Market Overview
April sustained high levels of market volatility as trade tensions escalated into action. The Trump administration introduced sweeping tariffs under its “Liberation Day” initiative, heightening fears of a broader trade war and raising concerns over global economic stability.
The Federal Reserve maintained its dovish tone, holding rates steady for the fourth consecutive month. While inflationary tariffs remained top of mind, labor market conditions remained mixed. Notably, headline CPI declined in both February and March from a near-term peak in January, suggesting the full impact of tariffs may not yet be reflected in pricing data.
Crude oil prices declined amid expectations of macroeconomic demand destruction due to tariffs and inflation, fading geopolitical tensions, and ongoing concerns about Chinese demand. Natural gas prices also fell, pressured by warmer-than-normal weather that led to above-average domestic inventory growth.
Midstream and Broader Energy Sector
Broad energy within the S&P 500 posted a negative return in April, with Energy (-13.9%) being the index’s worst-performing sector. Midstream also declined, though it outperformed broader energy markets due to the defensive nature of its long-term, fee-based contract structures.
AI remains a prominent secular theme. Hyperscalers continue to cite energy availability as a critical constraint to data center growth. As the power demand landscape evolves, natural gas stands out as a reliable and abundant fuel source for data centers requiring low-cost, dependable electricity. Midstream companies are positioned to benefit significantly from this trend, with their infrastructure essential to transporting natural gas to electricity generation facilities.
Looking Ahead
We believe natural gas will remain a cornerstone of reliable energy supply, particularly in supporting expanding AI infrastructure. Midstream operators with established pipeline networks are well positioned to capture the increased volume demand from growing electrification and compute-intensive applications.
Portfolio Performance
The portfolio underperformed the Tortoise MLP Index in April, returning -9.54% on both a gross and net basis, compared to the index’s -8.56% return.
Sector and Security Performance (gross of fees)
- Subsector performance was broadly negative, with the exception of Chemicals (+1.3%).
- Chemicals led performance, recovering modestly after March’s decline, as the sole security in the sector rebounded from tariff-driven demand concerns for downstream plastics.
- The Other (-13.9%) sector was the weakest performer, driven by NGL’s underperformance amid concerns that tariffs could dampen crude oil demand and reduce associated water gathering volumes.
Notable drivers of relative performance for the composite during April 2025:
| Company | Positioning | Performance Driver |
|---|---|---|
| Cheniere | Overweight | Outperformed as lower expected Permian crude production may reduce associated natural gas supply, benefiting LNG exporters. Additionally, natural gas remains a critical energy source for powering AI data centers, even amid a potential global slowdown. |
| NGL Energy Partners | Zero weight | Underperformed as tariff-driven crude oil demand concerns weighed on associated water gathering volumes |
| TC Energy | Overweight | Outperformed as investors rotated into non-U.S. midstream assets amid tariff uncertainty and a weakening U.S. dollar |
Detractors from relative performance for the composite during April 2025:
| Company | Positioning | Performance Driver |
|---|---|---|
| ONEOK | Overweight | Underperformed after Q1 earnings missed consensus expectations, despite the company maintaining FY guidance |
| Targa Resources | Zero Overweight | Underperformed on concerns over a potential global economic slowdown tied to trade tariffs and ahead of its May earnings release. Notably, Targa was the 9th best-performing stock in the S&P 500 in 2024. |
| Alliance Resource | Zero weight | Outperformed following an executive order from President Trump aimed at revitalizing the U.S. coal industry |
Your individual portfolio performance, taking fees into account, is available upon request. Client returns will be reduced by advisory fees and other expenses incurred as a client. Net returns are reduced by the model fee rate using the strategy’s standard annual fee of 75 basis points in the last month of the calendar quarter.
If you have any questions, please do not hesitate to contact the client relations team at clientrelations@tortoisecapital.com.
Disclosures
Source: Bloomberg and Tortoise as of 4/30/2025. Inception date: 2/1/2003. Inception date: 2/1/2003. Annualized for periods over one year. It is not possible to invest directly in an index. Gross results are presented before management fees but are inclusive of transaction costs.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS
This strategy is advised by Tortoise Capital Advisors, L.L.C. The Tortoise Midstream MLP Composite is a composite of Tortoise managed accounts focused on investments in publicly traded MLPs predominately comprised of U.S. energy infrastructure assets. The Tortoise MLP Index® is a float-adjusted, capitalization weighted index of energy master limited partnerships (MLPs). The S&P 500 Index® is an unmanaged, market-value weighted index of stocks that is widely regarded as the standard for measuring large-cap U.S. stock market performance. The S&P Energy Select Sector Index is a modified market capitalization-based index of S&P 500 companies in the energy sector that develop and produce crude oil and natural gas and provide drilling and other energy related services. Returns include reinvested dividends. The Alerian MLP Index is the leading gauge of energy infrastructure master limited partnerships (MLPs). The capped, float-adjusted, capitalization-weighted index, whose constituents earn the majority of their cash flow from midstream activities involving energy commodities, is disseminated real-time on a price-return basis (AMZ) and on a total-return basis (AMZX).
It is not possible to invest directly in an index. Investing involves risk, including possible loss of principal. Although information found in this commentary is derived from sources we believe to be accurate, we do not guarantee the accuracy of such information. The views expressed represent our assessment of the strategy and market environment as of the month end above and should not be considered a recommendation to buy, hold, or sell any security, and should not be relied on as research or investment advice. Holdings are as of the month end above and are subject to change without notice. The top three drivers and top three detractors are presented for informational purposes. A full list of drivers and detractors is available upon request. See Part 2A of Tortoise’s Form ADV for additional fee disclosures. A complete list of Tortoise Performance Composites is available upon request.