In a single week in mid-November, from the 15^th to 22^nd, $317 million flowed out of MLP mutual funds. It was an extraordinary exit over such a short period, second only in recent history to the first week of December 2015, when $340 million bolted. That was a time when every seller was motivated while buyers were scarce. Within two months the sector bottomed and began the glorious 2016 rally.

Nonetheless, the collective mutual fund exit in mid-November represented fully 1.5% of the $20 billion in such funds. In its way it was a run on the bank, punctuated by the apparent absence of a crisis anywhere else. Over that same time period, the S&P 500 rose 0.7%, the S&P Energy Sector ETF (XLE) rose 0.5% and the Oil Services ETF (OIH) rose 1.5%. MLPs underperformed all of these, as they usually did in November, dropping 0.2%. For the month as a whole, redemptions totaled $473million, more than 2% of the assets held by MLP mutual funds.

Earnings season had passed. Big fundamental news was sparse. Oil jumped from $55.50 to $58 on hopes of an extension to OPEC’s production cuts, further confusing MLP investors who learned to fear oil’s moves when it was falling and find the recent rally especially galling. Most notable that week was the announcement by Norway’s $1TN sovereign wealth fund of plans to divest from oil and gas stocks by the end of 2018 – a wholly sensible idea given the source of their wealth is natural gas. Most parts of the energy sector rose in the days following this announcement, whereas MLPs reacted as if Norway’s entire divestiture was going to fall on them. For this and other reasons, 1.5% of the capital in MLP mutual funds saw enough to exit. Oil and energy stocks were higher but MLPs weren’t, challenging equity analysts to explain the inexplicable. Understanding the 2017 performance of energy infrastructure stocks so clearly lies with the investors, not the operating companies.