MLPs or Mater Limited Partnership Companies are the companies which enjoy the benefits of a partnership and a public company with its own trading rights. However, many investors have not realized the potential of investing in such companies. If you look, you will find many ETFs and funds growing which is entirely made of MLPs. AMZA, the InfraCap Active MLP ETF is an actively managed fund that invests in midstream MLPs that collect, process, store, and transport energy products. Few of the top AMZA holdings include Energy Transfer Partners LP, Phillips 66 Partners LP, EQT Midstream Partners LP, NGL Energy Partners LP. AMZA stands out in MLPs because of it active management while most other ETFs track indices.
Another MLP ETF which is based on energy products is Alerian MLP ETF. The fund seeks investment results that correspond to performance of its underlying index, the Alerian MLP Infrastructure Index. The Alerian MLP ETF delivers exposure to Alerian MLP Infrastructure Index which a capped, float-adjusted, capitalization-weighted composite of energy infrastructure MLPs which earn mostly through their operations in the energy products.
You’ll find that most MLPs are found in the energy sector and this has its benefits. There many reasons why you should consider investing in an Energy Infrastructure MLPs.
- Income potential MLPs will pay out majority of the cash flow as quarterly dividends.
- Thematically, MLPs represent investment in the US energy infrastructure over the next years. MLPs own, operate and build energy infrastructure assets such as pipelines, storage facilities, and processing plants.
- There is a lot of growth in the industry. Billions of investment dollars are required in order to keep pace with boom of domestic production of natural gas and oil.
- Many MLPs benefit from inflation-hedged contracts and inelastic energy demand.
There is a lot of potential in seeking MLP as an investment option which the investor hasn’t realized yet. It still remains a lesser known form of investment. However, many financial advisors and professionals have posed the benefits of MLP to their clients and the investment in them is growing. Like in any other form investment, it is important to understand the risk, returns, and their correlation before investment. And lastly, invest smartly!
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