Benchmarks have always been an important part of investing. In general, most investors compare the performance of their stock portfolio against the S&P 500 (an index comprised of some of the largest US corporations). However, until recently a universal index for benchmarking Master Limited Partnerships (MLPs) was hard to come by. After some research, I was able to find an index which is considered the de facto standard for benchmarking MLPs: the Alerian MLP Index. The ticker is AMZX, and the performance of the index has a lot to say about the kind of returns MLPs can deliver.
According to data from Alerian Capital Management, the AMZX index has outperformed the S&P 500 over 1, 3, 5, and 10 year intervals. In fact, the AMZX index has a Compound Annual Growth Rate (CAGR) of about 18%, compared to around 6% for the S&P 500!
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