Most advisors evaluate MLP ETFs by comparing expense ratios and current yields. The index underneath can be treated as background noise.
We believe that’s a mistake.
The four major MLP benchmarks make fundamentally different decisions about what goes inside, how much weight each holding gets, and when to rebalance. Those decisions can shape the exposure your clients actually own.
Four Indices, Four Different Approaches
The Alerian MLP Index, Alerian MLP Infrastructure Index, S&P MLP Index, and Tortoise MLP Index each answer the same question differently: which MLPs belong in a benchmark portfolio? The table below summarizes the key structural differences.
| Index | Constituent Cap | Scope | Weighting |
| Alerian MLP Index | 12% (at rebalance) | Broad MLP (all sectors) | Float-adjusted market cap |
| Alerian MLP Infrastructure Index | 12% (at rebalance) | Infrastructure-oriented MLPs | Float-adjusted market cap |
| S&P MLP Index | Varies by methodology | Broad MLP (liquidity-filtered) | Float-adjusted market cap |
| Tortoise MLP Index® | 7.5% (at rebalance) | Transport, processing, storage | Float-adjusted market cap |
The Alerian MLP Index casts the widest net. It includes MLPs across the energy value chain without imposing concentration limits on individual holdings. The result is a portfolio where the top five names can represent over 60% of total exposure. AMLP currently holds just 14 securities1, with individual positions regularly bumping against the 12% constituent cap.
The Alerian MLP Infrastructure Index narrows the focus to infrastructure-oriented MLPs. It applies a 12% cap per issuer at rebalance, creating more balanced exposure across holdings while maintaining concentration in the largest names.
The S&P MLP Index uses different selection criteria and weighting methodology, emphasizing liquidity thresholds and its own constituent rules.
The Tortoise MLP Index® takes a different approach. It applies a 7.5% issuer cap at quarterly rebalance, uses float-adjusted market-cap weighting, and focuses specifically on MLPs engaged in transportation, processing, and storage of energy commodities.
What a 7.5% Cap Actually Does
The difference between a 12% position and a 7.5% cap sounds technical. In practice, it changes how a portfolio behaves when individual MLPs face operational challenges or regulatory issues.
When a single MLP represents 12% of an index and that company announces a distribution cut, regulatory setback, or operational problem, the index absorbs that impact at full concentration. A 7.5% cap reduces that single-name exposure by nearly 40%.
The cap also forces broader diversification. When the largest holdings hit the 7.5% threshold, the excess weight gets reallocated proportionally to other constituents. This systematically increases exposure to the next tier of large-cap MLPs rather than allowing a handful of names to dominate the portfolio.
Standard portfolio management practice avoids putting 12% of client capital into a single security. The Tortoise MLP Index® applies that same discipline at the index level.
Infrastructure Focus Versus Broad MLP Exposure
Not all MLPs operate the same business model. Some own pipelines that charge fees for transporting natural gas. Others process crude oil and earn margins on commodity spreads. Some operate storage terminals under long-term contracts. A few still carry direct commodity price exposure.
The Tortoise MLP Index® excludes MLPs with significant production exposure. It focuses on companies that transport, process, and store energy commodities under fee-based contracts, creating a portfolio tilted toward infrastructure economics rather than commodity speculation.
Fee-based revenue models generate cash flows tied to volume throughput, not commodity prices. A pipeline charging $0.50 per thousand cubic feet transported earns that fee whether natural gas trades at $2.00 or $6.00. The revenue depends on how much gas moves through the system, not what it sells for at the wellhead.
Broader MLP indices include companies across the value chain. That creates exposure to different revenue models, contract structures, and commodity sensitivities. The choice between infrastructure-focused and broad MLP exposure is a decision about which cash flow characteristics you want in the portfolio.
Float-Adjusted Weighting and Rebalancing Behavior
Float-adjusted market-cap weighting accounts for how much of a company’s equity actually trades in public markets. Some MLPs have significant insider ownership or strategic holdings that don’t participate in daily trading.
When an index uses float-adjusted weighting, it sizes positions based on the shares available for public investment rather than total market capitalization. This reduces the weight of companies where large blocks of equity sit in restricted ownership.
During rebalancing, float-adjusted indices respond to changes in both market cap and float. If a major MLP completes a secondary offering that increases public float, the index adjusts the weighting to reflect that new liquidity. If insiders acquire a large position, the float-adjusted weight decreases even if total market cap stays constant. This methodology creates different portfolio behavior than straight market-cap weighting during periods when MLPs issue equity, buy back units, or experience ownership structure changes.
Scarcity Value in a Permitting-Constrained Environment
Between 2010 and 2022, natural gas demand rose 49% while pipeline capacity grew only 26%.2 Storage capacity grew just 2%. The gap between demand growth and infrastructure expansion creates bottlenecks that threaten economic growth and energy reliability.
Building new pipeline infrastructure takes years of permitting, environmental review, and regulatory approval. Renewable energy projects take 2 to 4 years for solar or onshore wind and 5 to 10 years for offshore wind.3 Constructing a data center that consumes the equivalent of 80,000 homes’ worth of energy takes just over one year. That mismatch creates real capacity challenges.
Regulatory resistance to permitting new energy infrastructure makes existing pipeline assets increasingly valuable. In regions where government policies have prevented investment in new pipeline infrastructure, families pay utility rates between two and five times what other Americans face.4 MLP indices that focus on established infrastructure capture this scarcity value. The companies operating pipelines built decades ago own assets that would be difficult to replicate under current permitting regimes, which may show up in cash flow stability and pricing power over time.
Capital Discipline Has Changed the Asset Class
The MLP sector that exists today operates under different economics than the one advisors remember from 2014 to 2016. Since 2020, MLPs have generally become more capital disciplined. They’ve pulled back on capital spending, self-fund more of their capex programs, and prioritize shareholder returns through distributions and buybacks. It has been more than four years since a name in the Alerian MLP Infrastructure Index cut its regular distribution5, and the majority of constituents have grown distributions within the last year.
This transformation matters for index construction. MLPs no longer need to access capital markets regularly to fund growth projects. They generate free cash flow, maintain balance sheet discipline, and operate with lower leverage than the previous cycle. Indices that emphasize infrastructure-oriented MLPs capture this shift toward capital discipline and cash flow generation. The companies that survived the 2014-2020 period emerged with stronger balance sheets, more conservative management teams, and business models focused on fee-based contracts rather than commodity exposure.
Questions to Ask About Index Methodology
When you evaluate an MLP ETF, the index methodology document answers questions the fact sheet doesn’t address. A few worth asking:
- How many constituents does the index hold? A 14-security index behaves differently than a 30-security index during periods of sector rotation or individual company stress.
- What concentration limits apply at rebalance? An uncapped index can develop 12%+ positions in individual names. A 7.5% cap forces broader diversification.
- How does the index define eligible MLPs? Some include any publicly traded partnership. Others restrict constituents to infrastructure-focused companies with specific revenue characteristics.
- What weighting methodology does the index use? Float-adjusted market-cap weighting creates different exposure patterns than equal weighting or straight market-cap weighting.
- How often does the index rebalance? Quarterly rebalancing responds to market changes more frequently than annual rebalancing, which affects how quickly the index adapts to shifts in company fundamentals or market conditions.
- What liquidity and size thresholds must constituents meet? Minimum market cap requirements and average daily trading volume filters determine which MLPs qualify for inclusion.
Index Selection Is Portfolio Construction
The index underneath your MLP ETF determines sector exposure, concentration characteristics, and business model focus. Those decisions shape how the portfolio may perform across different market environments.
An index with no concentration limits and broad MLP inclusion delivers different risk and return characteristics than an index with a 7.5% issuer cap focused on infrastructure-oriented companies. Neither approach is objectively superior. They represent different design choices with different tradeoffs.
Most advisors spend more time comparing expense ratios than understanding index construction. The expense ratio matters. But the index determines what you actually own. When two MLP ETFs have similar yields and comparable fees, the index methodology is the variable that differentiates them. That makes index selection a primary decision, not an afterthought.
Interested in accessing the opportunity?
View TMLP’s fund page, our passively managed ETF, comprised of publicly traded companies organized in the form of limited partnerships or limited liability companies engaged in transportation, production, processing and/or storage of energy commodities.
Sources
1. AMLP Holdings, Stock Analysis (accessed 2025): https://stockanalysis.com/etf/amlp/holdings/
2. National Petroleum Council, Permitting Report (2024): https://permitting.npc.org/
3. RegGlobal, 2025 Report Card for America’s Energy (2025): https://reglobal.org/2025-report-card-for-americas-energy/
4. RealClearEnergy, Permitting Reform Is the Key to Energy Affordability (December 2025): https://www.realclearenergy.org/articles/2025/12/17/permitting_reform_is_the_key_to_energy_affordability_1153775.html
5. ETF Trends, MLP Investment Case Outlook: AMLP Turns 15 (2025): https://www.etftrends.com/energy-infrastructure-content-hub/mlp-investment-case-outlook-amlp-turns-15/
Alerian MLP ETF Important Information
Past performance is no guarantee of future results. Current performance may be lower or higher than the performance data quoted. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than original cost. Returns less than one year are not annualized. NAV prices are used to calculate market price performance prior to the date when the fund first traded on the New York Stock Exchange. Market performance is determined using the bid/ask midpoint at 4:00pm Eastern time, when the NAV is typically calculated. Market performance does not represent the returns you would receive if you traded shares at other times. For standardized performance current to the most recent month end for AMLP, please call 1-866-759-5679 or visit www.alpsfunds.com.
The investment objectives, strategies, policies or restrictions of AMLP may differ, and more information can be found in its prospectus. Therefore, we generally do not believe it is possible to make direct fund comparisons in an effort to highlight the benefits of a fund versus another.
AMLP Investment Objective: The Alerian MLP ETF (AMLP) seeks investment results that correspond (before fees and expenses) generally to the price and yield performance of its underlying index, the Alerian MLP Infrastructure Index (AMZI).
Click here for standardized performance, ETF fees, and prospectus.
AMLP Expense Ratio: 1.01%
Distributed by LPS Portfolio Solutions Distributor, Inc.
Important Information
Tortoise Capital Advisors, LLC is the advisor to the Tortoise MLP ETF. Exchange Traded Concepts, LLC serves as sub-adviser to the Tortoise MLP ETF
Before investing in the funds, investors should consider their investment goals, time horizons and risk tolerance. The funds’ investment objective, risks, charges and expenses must be considered carefully before investing. The statutory prospectuses and the summary prospectuses (click here) contain this and other important information about the funds. Copies of the funds’ prospectus may be obtained by calling 855-994-4437 or by emailing info@tortoisecapital.com. Read it carefully before investing.
As stated in the Prospectus, the total annual operating expenses are 0.50%. The adviser has agreed to pay all expenses incurred by the fund except for the advisory fee, interest, taxes, brokerage expenses and other fees, charges, taxes, levies or expenses (such as stamp taxes) incurred in connection with the execution of portfolio transactions or in connection with creation and redemption transactions.
Investing involves risk. Principal loss is possible. The Fund is classified as “non-diversified,” which means the Fund will expose a larger percentage of its assets to a smaller number of issuers than would a diversified fund. Exposure to a limited number of issuers exposes the Fund to greater market risk and potential losses than if its assets were diversified among a greater number of issuers. Because the Fund’s investment exposure will be concentrated in the energy infrastructure industry, the Fund is subject to loss due to adverse occurrences that may affect that industry. The Fund’s focus in this industry presents more risk than if it were broadly diversified over numerous industries and sectors of the economy. Companies in the energy infrastructure industry are subject to many risks that can negatively impact the revenues and viability of companies in this industry, including, but not limited to risks associated with companies owning and/or operating pipelines, gathering and processing assets, power infrastructure, propane assets, as well as capital markets, terrorism, natural disasters, climate change, operating, regulatory, environmental, supply and demand, and price volatility risks.
The Fund is classified as “non-diversified,” which means the Fund will expose a larger percentage of its assets to a smaller number of issuers than would a diversified fund. The Fund is a recently organized investment company with a limited operating history. As a result, prospective investors have a limited track record or history on which to base an investment decision.
MLPs are subject to many risks, including those that differ from the risks involved in an investment in the common stock of a corporation. Holders of MLP units have limited control and voting rights on matters affecting the partnership and are exposed to a remote possibility of liability for all of the obligations of that MLP. Holders of MLP units are also exposed to the risk that they will be required to repay amounts to the MLP that are wrongfully distributed to them. MLPs generally do not pay U.S. federal income tax at the partnership level, although under the centralized audit regime, MLPs are audited and imputed underpayments at the partnership level. The performance of securities issued by MLP Affiliates, including common shares of corporations that own general partner interests, primarily depends on the performance of an MLP. The risks and uncertainties that affect the MLP, its operational results, financial condition, cash flows and distributions also affect the value of securities held by that MLP’s affiliate.
Derivatives may be riskier than other types of investments because they may be more sensitive to changes in economic market conditions than other types of investments and could result in losses that significantly exceed the Fund’s original investment. The Fund’s use of derivatives instruments, including OTC swap arrangements, involves risks that are different from those associated with direct investments in portfolio securities. For example, if a swap agreement counterparty defaults on its payment obligations to the Fund, this default will cause the value of your investment in the Fund to decrease. The Fund may enter into derivatives arrangements with one or a limited number of counterparties.
Shares of exchange-traded funds (ETFs) are not individually redeemable and owners of the shares may acquire those shares from the ETF and tender those shares for redemption to the ETF in Creation Units only, see the ETF prospectus for additional information regarding Creation Units. Investors may purchase or sell ETF shares throughout the day through any brokerage account, which will result in typical brokerage commissions.
Nothing on this website should be considered a solicitation to buy or an offer to sell any shares of the portfolio in any jurisdiction where the offer or solicitation would be unlawful under the securities laws of such jurisdiction.
Nothing contained in this communication constitutes tax, legal or investment advice. Investors must consult their tax advisor or legal counsel for advice and information concerning their particular situation.
Quasar Distributors, LLC, distributor
NOT FDIC INSURED · NO BANK GUARANTEE · MAY LOSE VALUE
- AMLP Holdings, Stock Analysis (accessed 2025): https://stockanalysis.com/etf/amlp/holdings/ ↩︎
- National Petroleum Council, Permitting Report (2024): https://permitting.npc.org/ ↩︎
- RegGlobal, 2025 Report Card for America’s Energy (2025): https://reglobal.org/2025-report-card-for-americas-energy/ ↩︎
- RealClearEnergy, Permitting Reform Is the Key to Energy Affordability (December 2025): https://www.realclearenergy.org/articles/2025/12/17/permitting_reform_is_the_key_to_energy_affordability_1153775.html ↩︎
- ETF Trends, MLP Investment Case Outlook: AMLP Turns 15 (2025): https://www.etftrends.com/energy-infrastructure-content-hub/mlp-investment-case-outlook-amlp-turns-15/ ↩︎