Looking back over 2011, the main themes show that investors chased yield, the equity markets remained active, infrastructure demands shifted towards oil and natural gas liquids and two MLPs raised record-setting equity raises.

Through November 2011, the Alerian MLP Infrastructure Index (AMZI) gained more than 10.3% on a total return basis, compared to the S&P 500 return of 0.9%. Unlike the 85% and 35% total returns the AMZI experienced in 2009 and 2010, respectively, this year’s returns have reverted to normalized industry analysts’ expectations of high-single to low-teen total returns.

In a year where U.S. Treasuries fell below 2%, investors sought out higher-yielding asset classes with records of stable and growing distributions. With yields averaging 6% for the year and distribution growth of 5.2% (third-quarter 2011 versus third-quarter 2010) for the AMZI, master limited partnerships (MLPs) fit the profile for many investors’ appetite for yield. Various MLP pooled products—such as exchange-traded funds (ETFs), exchange-traded notes (ETNs), mutual funds and closed-end funds—have created more accessibility to the asset class. For the year, total assets from such products increased by $4.1 billion to $16.2 billion, of which, $2.1 billion of the increase was from Alerian linked-products. Of the $4.1 billion, $2.1 billion was from exchange traded products, $1.2 billion from mutual funds and $0.8 billion from closed end funds.

MLPs raised $12.5 billion in total equity via 53 follow-on offerings, an increase from the $11.4 billion raised in 2010. Also, this was the first year that an MLP raised more than $600 million overnight, an event that occurred not only once, but on two occasions. Additionally, nearly $3.8 billion was raised between seven initial public offerings (IPOs) in 2011. The $2.9 billion Kinder Morgan Inc. offering was one of the most publicized energy IPOs for the year and the largest since 1998. Despite rumors of various integrated companies forming MLPs to monetize assets, Tesoro Logistics LP was the only integrated carve-out IPO of the year.

While the infrastructure focus for the past few years has been largely natural gas in areas such as the Barnett, Haynesville, and Fayetteville shales, this year’s focus has primarily been on natural gas liquids (NGL) take-away from areas such as the Eagle Ford, Marcellus, and Niobrara shales or crude oil take-away from Canadian, Bakken and Permian plays—and particularly at the Cushing, Oklahoma hub.

Given the highly competitive environment for infrastructure in such areas, a growing trend of MLP to MLP, or MLP-producer joint ventures utilized to minimize risk has arisen. On the liquids front, several projects have been announced to take NGLs to the Mont Belvieu NGL hub, in Texas, from Conway, Kansas, and from the Marcellus areas where liquids drilling continues to increase. On the crude front, the story for the year has been the emergence of solutions to relieve the supply glut at the Cushing, Oklahoma, hub from crude flowing southward from the oil sands in Canada and the Bakken in Montana. Uncertainty surrounding the Keystone XL pipeline’s future created opportunities for several MLPs to enter the race to transport crude oil from Oklahoma to the Gulf Coast—either by reversing oil pipelines, converting natural gas pipelines or building new pipelines.

Last year marked several general partner (GP) to limited partner (LP) mergers or buyouts. This year marked a major trend toward MLP corporate acquisitions (proposals, at least). Notably, two of the larger proposals have been made at the publicly traded MLP GP level, rather than the LP level: Kinder Morgan Inc. for El Paso Corp. and Energy Transfer Equity for Southern Union.

Looking forward to 2012, some trends that might emerge include exploration and production companies or private-equity firms spinning off their midstream assets into MLPs, infrastructure projects in the Utica, more export capacity out of Mont Belvieu (potentially internationally) and even more non-traditional infrastructure MLP IPOs.

Overall, with plenty of organic investment opportunities and low cost of capital to pursue acquisitions, MLPs are expected to continue generating stable cash flows and distributing consistent distributions during the next several decades.

The Alerian MLP Infrastructure gained 10.3% on a total return basis through November 2011 versus the S&P 500 of 0.9%.