2. Attractive Yield Spread. The ALPS Alerian MLP ETF (AMLP) currently boasts a 6.2% annualized yield. The historical spread between 10-year Treasuries is currently 400 basis points, when it might normally be closer to 250 basis points; the yield spread between AMLP and the iShares 20+ Year Treasury (TLT) is also wider than the historical average. Topping it off, AMLP has genuine potential for capital appreciation, whereas individual Treasury bond debt matures and is currently priced near record lows.
3. Low Correlation With Other High Yield Instruments. In a play-by-play financial crisis (e.g., subprime 2008, sovereign debt 2011), virtually all risk assets move together. The most troubling aspect of the "risk on-risk-off" phenomenon is the difficulty in diversifying one's portfolio with low-correlating assets.
That said, the JP Morgan Alerian MLP ETN (AMJ) has very slight negative correlations with a number of high-yielding investments. The one-year correlation coefficients with SPDR Select Utilities (XLU) and iShares JP Morgan Emerging Market Bond (EMB) are -.09 and -.30 respectively.
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