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MLP Asset Class | Introduction

Master Limited Partnerships (MLP) Overview

Energy Infrastructure Master Limited Partnerships (MLPs) provide transportation, storage, processing, refining, marketing, exploration, production or mining of any mineral or natural resource. Interests, or units, trade on public security exchanges exactly like the shares of a corporation. Midstream MLPs, a focus of our investment programs, typically operate “toll road” business models. They earn fees for the services they provide, often without taking ownership of the physical commodities they transport and store.

Structured as limited partnerships, MLPs are generally not subject to corporate-level taxes. They distribute the majority of their cash flow to investors in the form of quarterly distributions, which are largely treated as return of capital, making investing in MLPs highly tax-efficient.

As a group, MLPs have a long history of growing distributions faster than inflation, making them a useful inflation hedge, as evidenced by the fact that each year from 2000 through 2010, MLPs median annual distribution growth has exceeded the U.S. Consumer Price Index.*

Potential Benefits of Investing in MLPs

*Source: MLP public filings and U.S. Bureau of Labor Statistics

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