The MLP space continue to attract attention from investors as June marked the fourth straight month that the sector had outpaced the Standard & Poor’s 500 index as well as the utilities and REIT markets. According to the Wells Fargo Securities MLP Index, the MLP sector was up 6.6% in the month and 15.3% year-to-date compared to a 1.9% gain in June and year-to-date growth of 6.1% for the S&P 500.

Wells Fargo Securities’ MLP Monthly report for July attributed the MLP sector’s growth to mergers and acquisition (M&A) activity, a positive economic outlook based on commentary from the Federal Reserve, improved oil prices and the announcement of several large pipeline projects that could support future growth.

Even with valuations increasing, the report said that M&A activity could drive MLP performance for a while. This is especially true given that the backdrop for MLPs remains attractive with stable fundamentals and low interest rates.

The investment firm singled out Williams Cos. Inc.’s acquisition of the remaining 50% interest in Access Midstream Partners LP’s general partner and the proposed merger between Access Midstream Partners and Williams Partners LP, as well as the merger talks between Energy Transfer Equity LP and Targa Resources Corp.

In June, Energy Transfer Partners LP announced two large pipeline projects in the Bakken and Marcellus/Utica shales that have an estimated capital spend of $8.8 billion. Additionally, EQT Corp. and a subsidiary of NextEra Energy Inc. announced a nonbinding open season for the Mountain Valley Pipeline in the Marcellus and Utica shales while Spectra Energy Corp. announced plans to expand its Algonquin and Maritimes pipelines in New England.

“These potential and secured projects suggest that infrastructure spending remains visible and robust for the next several years supporting long-term visibility for distribution growth,” according to the report.

On a macro level, economic factors are likely to remain supportive of the MLP sector. “On June 18, Federal Reserve Chair Janet Yellen noted that an accommodative monetary policy, rising property and equity prices and an improving global economy should be supportive of above-trend growth. These comments suggest the Fed is likely to remain accommodative as it relates to interest rates, which should be perceived as positive for MLPs,” the report said.

Solid prices for crude, natural gas and NGL are also supportive of drilling activity that should ensure production continues to grow. Additionally, crude price spreads remain wide between locations, which should support lease gathering activities.

“We see the potential for a broader equity market correction as the biggest risk to near-term performance. We continue to maintain a long-term positive outlook for the sector, primarily supported by the build out of energy infrastructure to transport shale driven supply growth,” according to the report.

Wells Fargo Securities anticipates organic spending of $30 billion annually with the most demand coming from crude oil pipelines and logistics; gathering, processing and NGL fractionation; LNG and NGL exports; storage opportunities in select markets; natural gas pipeline expansion and new buildout opportunities in the Northeast; and repurposing/reconfiguration of existing pipelines.

Organic growth projects for 2014 are expected to exceed this average with an anticipated $33.7 billion in spending. “This would mark the highest annual amount of organic capital investments on record. Over the past five years (2009 to 2013), organic capital investments averaged $18 billion per year. While our forecast suggests a decline in aggregate sector spending after 2014, this is primarily due to reduced visibility and limited guidance beyond 1 to 2 years forward, and reflects conservatism in our modeling assumptions. In reality, growth capital spending levels could remain elevated into the future, in our view,” the report said.

While upstream MLPs are outpacing their midstream counterparts, a growing segment is the marine MLP that is characterized by GasLog Partners LP, an international owner, operator and manager of LNG carriers.

The company held its IPO in May and has experienced a 73% increase in value compared to a 5% increase of the S&P 500 during the same 60-day timeframe. Similar to midstream MLPs, the company’s growth is largely attributed to a large portfolio of dropdown acquisitions and a high-quality sponsor. The report said that marine MLPs, which include both transportation and exploration and production companies, will continue to grow in 2014 as there is the potential for 12 to 14 members, up from the current number of nine.

These include Scorpio Tankers Inc., which owns and operates a fleet of tankers that transport gasoline, heating oil and fuel oil from refineries to end users, along with other players in the LNG space. “MLPs generally remain an attractive structure for marine companies given their significant valuation premium and attractive financing for companies with aggressive expansion plans or significant funding needs,” the report said.

Marine MLP IPOs should also remain attractive to investors as the demand for U.S. energy exports increases. Obviously this segment stands to gain a great deal if the federal government allows crude to be exported.