Midstream Energy Monthly Report | December

Midstream Energy ETFKey Takeaways | December

At the end of November the underlying index for the Midstream Energy ETF AEDW was yielding 6.8%.Companies with investment-grade credit ratings represented over 92% of the index by weighting. Companies that have grown their dividends over the last year accounted for 88.3% of AEDW by weighting.

AEDW saw solid performance in November gaining 7.04% on a net total-return basis. The index performed defensively as Brent oil prices fell -5.2% and closed the month under $83 per barrel. The STOXX Europe 600 Oil and Gas Index (SXEP) was up 0.6% on a total-return basis in November. Year-to-date through 30 November AEDW has gained 14.1% on a net-total-return basis outpacing the 9.0% total return for the SXEP.

November saw the remainder of constituents report third quarter earnings. Results were generally strong and several constituents raised financial guidance for 2023. Buyback activity also continued during the quarter and since the start of 2022 AEDW constituents have spent nearly $8 billion on equity repurchases.

Looking ahead to 2024 the midstream space is well positioned to maintain its defensiveness if energy volatility continues. Dividend growth trends and equity buybacks are expected to continue as these tailwinds from free cash flow generation remain intact.

Constituent News

Energy Transfer (ET 10.56% Weight) completed its all-equity acquisition of Crestwood Equity Partners for ~$7.1 billion including debt.

Enbridge (ENB CN 10.30% Weight) announced a 3.1% increase to its quarterly dividend and provided 2024 guidance. ENB is expecting more than 4% EBITDA growth for its base business relative to the midpoint of 2023 guidance. Earlier in November ENB announced it was acquiring a 50% interest in the Fox Squirrel Solar Project in Ohio with EDF Renewables with the first phase expected to be in service by year end.

TC Energy (TRP CN 9.24% Weight) provided 2024 guidance including expectations for EBITDA growth next year of 5-7%.

Kinder Morgan (KMI 8.20% Weight) is acquiring a natural gas pipeline system in Texas from NextEra Energy Partners (NEP not in AEDW) for $1.8 billion. The pipeline system connects the Eagle Ford basin to demand centers in Mexico and on the Gulf Coast.

Plains All American (PAA/PAGP 3.12% Weight) raised its 2023 Adjusted EBITDA guidance by $125 million at the midpoint and intends to recommend a 19% increase to its quarterly distribution payable in February 2024.

Targa Resources (TRGP 1.47% Weight) spent $132 million on equity buybacks during the third quarter and expects to recommend a 50% increase to its dividend payable in May 2024.

Cheniere Energy (LNG 1.24% Weight) signed a 20-year sale and purchase agreement with China-based Foran Energy Group for 0.9 million tons per year of LNG from its Sabine Pass Liquefaction Expansion Project.

Sources available upon request. Data as of 30.11.2023. Please remember that all performance figures are showing net data. Past performance is not indicative of future performance and when you invest in ETFs your capital is at risk.

Midstream Energy ETFPerformance
As of 30.11.2023

1M

3M

6M

YTD

12M

2Y

3Y

SI

Alerian Midstream Energy Dividend UCITS ETF

7.06%

6.83%

17.03%

14.83%

8.65%

40.61%

88.13%

109.11%

Alerian Midstream Energy Dividend Index (NTR)

7.04%

6.80%

16.76%

14.13%

8.03%

39.05%

84.57%

103.38%

Please note that all performance figures are showing net data.Source: Bloomberg / HANetf. Data as of 30/11/2023

Performance before inception is based on back tested data. Back testing is the process of evaluating an investment strategy by applying it to historical data to simulate what the performance of such strategy would have been. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance. Past performance for the index is in USD. Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product. Investors should read the prospectus of the Issuer (“Prospectus”) before investing and should refer to the section of the Prospectus entitled &lsquoRisk Factors’ for further details of risks associated with an investment in this product. When you invest in ETFs and ETCs your capital is at risk.