Upstream Master Limited Partnerships sometimes get short shrift from Wall Street -- especially when it comes to indexing and benchmarks and performance measurements.

A new upstream index dedicated to racking MLPs, and passing performance and financial issues along to investors, promises to change all that. The new index is called the Cushing Royalty Trust and Upstream Income Index (CRTY). According to financial statements provided to Oil and Gas Investor by Cushing, the index is a float-adjusted market capitalization weighted index of the top 25 upstream MLPs and U.S. royalty trusts with 7.5% individual securities limits.

The index has some other benchmarks for the energy MLPs it covers, including:

• The index will be calculated by S&P;

• The index has a liquidity provision (components must have 30-day average daily value traded within 90% of universe average value);

• And, the index has a float provision (at least 20% of common) and a royalty trust term provision of at least 25% of term or volume left.

This from Cushing:

We plan to use this as a benchmark for oil and gas producing upstream MLPs and trusts going forward. Components are as follows: BBEP (7.5%), EVEP (7.5%), LINE (7.5%), VNR (7.5%), BPT (7.5%), LGCY (6.0%), SJT (5.3%), SBR (5.0%), PBT (4.9%), PER (4.8%), SDT (4.5%), DMLP (4.2%), CHKR (3.5%), HGT (3.2%), MVO (3.0%), PSE (2.7%), QRE (2.6%), ECT (2.1%), LRE (1.9%), VOC (1.7%), NDRO (1.7%), CRE (1.4%), MEMP (1.1%), MCEP (0.9%). In the future we anticipate alternative products to be linked to the CRTY index, with index additions and deletions potentially driving short run equity performance.

Cushing and its investment advisory company, Swank Capital, have rolled out two previous MLP-specific indices that are calculated and maintained by Standard & Poor’s:

• The Cushing 30 MLP Index (MLPX) is an equally weighted benchmark for the MLP asset class that is focused on total return.

• The Cushing MLP High Income Index (MLPY) incorporates a broader base of higher-yielding MLPs utilizing a proprietary tiered methodology for security selection. It seeks to generate income at higher levels than the MLP total return indices.

CRTY will be the most recent foray into energy MLP indices for Cushing and Swank.

MLPs are partnership deals that are publicly traded on financial investment exchanges. They’re a close cousin of limited partnership, especially how MLPs are structured tax-wise, but MLPs offer investors the liquidity features of common stocks.

Cushing is no stranger to oil and gas investments. According to company statements, Cushing MLP Asset Management LP is a wholly-owned subsidiary of Swank Capital LLC and an SEC-registered investment adviser headquartered in Dallas, Texas. Cushing serves as investment adviser to affiliated funds, which invest primarily in securities of MLPs, and other natural resource companies. As of April 30, 2012, Cushing had approximately $2 billion of assets under management in closed-end funds, an open-end fund, privately offered funds and separately managed accounts.

The investment firm already runs an MLP fund -- the Cushing Royalty & Income Fund (it trades under the symbol SRF). The fund seeks a high total return with an emphasis on current income, according to its prospectus. Closer to home for MLP investors, the fund also seeks to provide shareholders with a tax-efficient vehicle to invest in a portfolio of energy-related U.S. royalty trusts, E&P MLPs and Canadian royalty trusts and exploration and production companies and other energy assets.

SRF, launched in February 24, 2012, already has $224 million in net assets, and seems to be gaining steam. The fund’s prospectus also notes that, compared to traditional income-oriented investments (e.g. REITs, utilities and bonds), Energy Trusts and E&P MLPs have historically produced higher amounts of income for investors.

Cushing offers some other reasons for investors to turn to energy MLP’s:

• Opportunity for growth: Increased production through development drilling activities and acquisition activities may provide opportunities for distribution growth.

• Potential inflation hedge: Energy price increases in the future may increase distribution rates.

• Simplified tax reporting: The fund will issue investors a single consolidated Form 1099 (no K-1s, no tax booklets, blocks UBTI).

• Professional management: Access to specialized expertise in a diversified portfolio from a seasoned Adviser that has been investing in Energy Trusts and MLPs since 2003.

• Good investment in a bad economy: A slow growth economy and projected low interest rates for the foreseeable future support the need for income paying investments.

• Dividend benefit: Stocks paying dividends have historically performed better over full market cycles.

• Good cash flow: Energy Trusts and E&P MLPs are generally characterized by dependable cash flows that fluctuate with increases or decreases in commodity prices.

As an investment firm, Cushing is decidedly bullish on oil. The firm estimates that global demand for crude oil will grow substantially. The firm notes that a good chunk of that growth will come from emerging market countries, noting that the average U.S. consumer uses 23 barrels of oil annually, but that number falls to three barrels for Chinese consumers and a just one barrel for Indian consumers.

With a new energy MLP index and a new energy MLP fund, Cushing is placing a significant bet that, increasingly, when investors turn to oil and gas stocks, they’ll take the road less travelled and pour their cash into master limited partnerships. So far, it seems like a decent bet.