This can be seen in the sharp divergence between the DJ utility index which is up about 6% YTD v the Alerian index of MLP's which are down about 7%.
The thrust of my question is: aren't MLP's essentially utilities? Now I know one explanation is that they are viewed as energy related companies. This is a perception. The question is: what is the reality?
I continue to view the MLP's as essentially utilities which over longer periods have outperformed the DJ utility index. I believe that the market is wrong in creating the increased volitility to MLP's. This appears to be do to increased individual ownership of MLP's v utilities and to complexities associated with K-1 tax reporting.
If KMP were a utility, it would generate utility-like return on equity and trade at around book, as do most utilities. But KMP trades at more than 3x book, and that's before the GP takes ~50% of DCF. So you better pray this is not a utility.
A key reason utilities trade close to book value appears to be because the regulatory authorities set rates by return on investment, which is based on book values. MLP rate setting appears to be more pricing based on inflation effects on revenues.
However, I am not sure as to the details of utility and MLP rate setting.