Swank Capital
The Cushing® Indices | Methodology
The Cushing® 30 MLP Index Methodology
The Cushing® MLP High Income Index Methodology
The Cushing® 30 MLP Index Methodology
Description
The Cushing® 30 MLP Index (Ticker: MLPX) is a North American Energy Infrastructure equal weighted index comprised of 30 publicly traded stocks that hold midstream energy assets. Swank Capital, creator of the Cushing® 30 MLP index, has enlisted S&P Custom Indices to calculate and maintain the index. The index is rebalanced quarterly by S&P Custom Indices.
The index is disseminated real-time on a price return basis and quoted under the ticker symbol "MLPX". The corresponding total return index is calculated on an end-of-day basis and is disseminated daily through its ticker symbol, "MLPXTR". In addition, Standard & Poor's has calculated 8 years of historical index data on both a price and total return basis. Swank also publishes relevant constituent data points, such as total market capitalization and dividend yield, on the publicly available website www.cushingmlpindex.com. Companies are added or removed by Swank based on the methodology described herein.
Objective
The objective of the Cushing® 30 MLP Index is to provide investors with a realistic measure of MLP asset class performance, which is unbiased by market capitalization and investable in today's market place based on prudent portfolio management guidelines for a passively managed portfolio.
Rationale
We believe a market capitalization weighted index inaccurately reflects the performance of an asset class because as stocks increase in value, they have a disproportionately high allocation in the index, and as stocks decrease in value, they develop a disproportionately low allocation to the index constituents. Market capitalization weighted indexes rely only upon size (in effect, stock prices) to establish weighting percentages. This non-fundamental approach can expose investors to unnecessary risks. In the MLP sector there is a high correlation between a stock's price performance and growth of that MLP's distribution. The smaller, faster-growing companies have tended to out perform the larger cap companies over any long term time horizon and there is no recognized quotable index to capture that performance today. We believe the Cushing® 30 MLP Index is the standard for investors who want to gain passive exposure to the MLP asset class. Using Standard & Poor's proprietary calculation methodology, the Cushing® 30 MLP Index provides a reliable, transparent index to track this growing asset class. The Cushing® 30 MLP Index has been developed for actual use by portfolio managers providing a realistic portfolio with allocation levels appropriate to and represents an investable opportunity set.
The Cushing® MLP High Income Index Methodology
Description
The Cushing® MLP High Income Index (Ticker: MLPY) is a 30 company index that utilizes a three tiered weighting system based upon current indicative yields to determine the constituents.
CUSHING MLP INCOME INDEX - SELECTION CRITERIA
| Tier | Index Weighting | Market Capitalization Minimum | 30 Day Average Daily Trading Volume Minimum |
| TIER I | 5.00% | >= $1.0 billion | >= 500,000 |
| TIER II | 3.50% | >= $0.7 billion | >= 300,000 |
| TIER III | 1.50% | >= $0.5 billion | >= 200,000 |
In addition to the criteria listed above, if a company has made a public announcement or guidance of its next quarter's distribution, then that quarterly distribution will be used to calculate the current indicative yield.
Swank Capital, creator of the Cushing® MLP High Income index, enlists S&P Custom Indices to calculate and maintain the index. The index constituents will change quarterly based upon current indicative yields. The index is rebalanced quarterly by S&P Custom Indices. The index is disseminated real-time on a price return basis and quoted under the ticker symbol “MLPY”. The corresponding total return index is calculated on an end-of-day basis and is disseminated daily through its ticker symbol, “MLPYTR”. Swank also publishes relevant constituent data points, such as total market capitalization and dividend yield, on the publicly available website www.cushingmlpindex.com. Companies are added or removed by Swank based on the methodology described herein. Swank will announce changes to the index on its publicly available website, www.cushingmlpindex.com.
Objective
The Cushing® MLP High Income index is designed and constructed to allow investors an opportunity to achieve a high level of current income by owning the highest yielding MLPs in today's market place based on prudent portfolio management guidelines for a passively managed portfolio.
Rationale
We believe a market capitalization weighted index inaccurately reflects the performance of an asset class because as stocks increase in value, they have a disproportionately high allocation in the index, and as stocks decrease in value, they develop a disproportionately low allocation to the index constituents. Market capitalization weighted indexes rely only upon size (in effect, stock prices) to establish weighting percentages. We believe the Cushing® MLP High Income Index is a standard for investors who want to gain passive exposure to the MLP asset class with higher income potential. Using Standard & Poor's proprietary calculation methodology, the Cushing® MLP High Income Index provides a reliable, transparent index to achieve high income from this growing asset class. The Cushing® MLP High Income Index has been developed for actual use by portfolio managers providing a realistic portfolio with allocation levels appropriate to and represents a high income opportunity set.
The Cushing® 30 MLP Index and The Cushing® MLP High Income Index are each the exclusive property of Cushing® MLP Asset Management, L.P., which has contracted with S&P to maintain and calculate each Index. Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC. “Calculated by S&P Custom Indices” and its related stylized mark(s) are service marks of Standard & Poor’s Financial Services LLC and have been licensed for use by Cushing® MLP Asset Management, L.P.. S&P and its affiliates shall have no liability for any errors or omissions in calculating the Indices.
