Dorsey Wright MLP Select Index Rebalance Report: September 2019

  • In the month of August MLPs struggled (DWA MLP Index -4.1%, Alerian MLP Index -5.5%) as equities sold off and oil was down almost 6% while gasoline was down 15.2%.

  • Two key energy market drivers in August were China trade talks and crude supply. The US and China struggled to make progress in August. No deal is being interpreted by the market as a potential demand risk. In addition, August saw a couple surprise crude builds. These unexpected builds proved to be a catalyst for sharp selloffs in WTI.

  • With commodities and the S&P 500 selling off in August, MLPs were not immune. However, the DWA MLP Index continues to outperform the Alerian benchmark; August outperformance +1.4% and +10.5% YTD. This is the tenth month out of twelve & twentieth month out of the last twenty-five that DWA outperformed.

  • We believe September’s macro environment will again be led by China trade talks. Announced September deputy level meetings and October senior meetings led to a macro rally on 9/4 and 9/5. Crude followers will be keeping close tabs on oil supplies to see if the surprise builds in August were a one-off or a new trend.


Macro-Backdrop: Energy, Equity, & Commodity Performance


MLP Spotlight

  • August DWA MLP Index Constituents Performance


  • The DWA MLP Index vs. Alerian MLP Index Historical Total Return Performance



MLP Index Constituents by Subindustry

  • The current holdings and weights for the DWA MLP Index as of September 3rd, 2019

  • On a monthly basis, the DWA MLP Index rebalances to equal-weight after selecting the top 15 MLPs exhibiting the largest positive relative strength characteristics according to the proprietary Dorsey Wright Relative Strength Ranking Methodology.


  • The current holdings and weights for the Alerian MLP Index as of September 3rd, 2019

  • The Alerian MLP Index is a capped, float-adjusted, capitalization-weighted index, whose constituents earn the majority of their cash flow from midstream activities involving energy commodities.


What is the DWA MLP Select™ Index?

The DWA MLP Select™ Index includes 15 MLPs based on the proprietary Dorsey Wright Relative Strength Ranking Methodology. Relative Strength attempts to minimize exposure to underperforming positions, while maximizing exposure to securities that have demonstrated the potential to outperform the other securities in the investment universe. On a monthly basis, this index rebalances the equally-weighted basket by selecting the top 15 MLPs exhibiting the largest positive relative strength characteristics.


Disclaimer

Source: Bloomberg L.P. DWA MLP Select™ Index was launched on 5/1/2016. DWA MLP Select™ Index data prior to that date is hypothetical and reflects the application of the index methodology in hindsight. The hypothetical data cannot completely account for the impact of financial risk in actual trading. Past historical or hypothetical data is not a guarantee of future index performance.


For Institutional use only, this is not intended for retail investors, public viewing or distribution.


Past performance is no guarantee of future returns. The opinions and views expressed are as of the date published and are subject to change without notice. They are for information purposes only and should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation to buy, sell or hold any security, investment strategy or market sector. All third party links are not sponsored, endorsed, or provided by REX Shares, LLC. There is no guarantee that the information supplied is accurate, complete, or timely, nor are there any warranties with regards to the results obtained from its use.


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Dorsey, Wright & Associates, LLC (“DWA”) makes no warranty, express or implied, as to the results to be obtained by Bank of Montreal, the investors in the ETNs, or any other person or entity from the use of the DWA MLP Select Index or the ETNs. DWA expressly disclaims all warranties of merchantability or fitness for a particular purpose or use of the ETNs. DWA and BMO shall have no liability to each other or to any third party for lost profits or indirect, punitive, special or consequential damages (including lost profits) arising out of the licensing arrangements between the parties, even if advised of the possibility of such damages.

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