Though the MLP sector provided positive returns this quarter, the sectors performance lagged that of the broader markets. The MLP sector, as measured by the Alerian MLP Index, produced a total return of 1.97% for the quarter versus the 12.59% total return of the S&P 500 Index. The broader market rally appeared to have been sparked by some encouraging domestic economic data and seeming improvement in the Eurozone. Given that the industries represented by the S&P 500 Index often have greater exposure to general economic trends than MLPs, this broader market outperformance is not surprising.

Sector performance for the quarter was characterized by a continued appreciation for partnerships exposed to oil and NGL rich shale plays and the corresponding growth opportunities. Additionally, both sectors and names that were neglected last year received attention during the quarter while investors took profits in investments that had outperformed over the past several months.

Looking forward, we expect to see varied performance across MLP sub-sectors. We believe headwinds remain for propane, natural gas storage and coal, and growth opportunities are likely limited for interstate natural gas pipelines. However, growth opportunities related to growing domestic natural gas liquids and crude oil production are varied and substantial in our opinion. We continue to expect robust acquisition activity within the sector as traditional owners of midstream assets continue to rationalize their asset portfolios.