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Portfolio Update

Leaders and Laggards

By Roger S. Conrad, on Jan. 16, 2015

In 2013, energy-focused master limited partnerships (MLP) and high-yielding oil and gas producers enjoyed a banner year, as enthusiastic investors sought exposure to the shale revolution.

Income-seeking investors scorned utility stocks and real estate investment trusts (REIT) amid concerns that their sensitivity to interest rates would cause these securities to sell off as the Federal Reserve normalizes monetary policy.

These sectors traded places in 2014. The Dow Jones Utilities Average posted its best annual return since 2000, while the Bloomberg North American REIT Index matched its robust gains posted in 2009 and 2010.

Meanwhile, the free fall in energy prices has devastated high-yielding oil and gas producers and taken a bite out of the returns posted by midstream energy MLPs. These trends have continued into 2015.

(Click graph to enlarge.)AMZI BBREIT UTIL YXENP

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