Barron’s ran a piece on MLPs (Master Limited Partnerships) over the weekend. Regular readers of our research will know that we have long liked the sector and of course run an MLP strategy. Finding sources of investment income while avoiding the tyranny of conventional bonds manipulated by government intervention is what we do, and MLPs fit with that approach.
The article was positive but nonetheless balanced (at least in my opinion). We’ve avoided MLP funds (such as closed end funds, ETFs etc.) for many reasons, including tax-inefficiency and leverage (investing with leverage is something we avoid). The article made the case for MLP funds in retirement accounts and for smaller retail accounts, and while there’s no reason to contradict what they wrote it remains true that direct investments in MLPs are the most tax-efficient way for high net worth clients with, say, $500K and up to access the strategy. It’s worth reading the article.