Energy MLPs for Retirement Income?

For retirees, distributions from master limited partnerships have obvious appeal.

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Comments (4)
Miriam,

If you're going to write an article that asks the question, why not include the other side of the argument, especially when there are ETFs & ETNs like AMJ, AMLP, and MLPI available to investors, providing both diversification within the various assets and good cash flow for IRAs and 401k accounts.

Respectfully, Mike
Posted by Michael S | Sunday, August 10 2014 at 2:26PM ET
Miriam,

If you're going to write an article that asks the question, why not include the other side of the argument, especially when there are ETFs & ETNs like AMJ, AMLP, and MLPI available to investors, providing both diversification within the various assets and good cash flow for IRAs and 401k accounts.

Respectfully, Mike
Posted by Michael S | Sunday, August 10 2014 at 2:26PM ET
Miriam,

If you're going to write an article that asks the question, why not include the other side of the argument, especially when there are ETFs & ETNs like AMJ, AMLP, and MLPI available to investors, providing both diversification within the various assets and good cash flow for IRAs and 401k accounts.

Respectfully, Mike
Posted by Michael S | Sunday, August 10 2014 at 2:26PM ET
Depending on the client's investment objective(s), MLPs can be a good source of cash flow distributions and may offer long term capital appreciation.

MLPs are unique as investment products...and not all MLPs are created the same. 'Upstream' MLPs deal with exploring, mining and extracting, much as XOM might do. 'Midstream' MLPs...which represent most...have to do with transporting, storing and some refining. 'Downstream' MLPs have to do with storing, wholesaling and retailing and some refining. The propane MLPs are the biggest players in this space. These 3 MLP forms behave quite differently and are sensitive to different market forces. You can't really speak of them as one homogeneous group.

MLPs are a tax pain in the butt..and other than MLP ETNs (which I DO NOT recommend to clients), have tax issues that cannot be worked around...they simply must be accepted as part of the investment decision.

Midstream pipelines and the MLPs that own them, are here to stay. They are very much a part of our national energy marketplace. How they operate, how limited partnership units are handled in client accounts and tax issues are foreign to many. I think self education of advisers might help them in dealing with this asset class.

BruceM
Posted by Bruce M | Monday, August 11 2014 at 3:21PM ET
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