Master limited partnerships (MLPs) are completing a record year of gains.
The previous record year for the Alerian MLP Index was 2003, when the index gained 35% and the comparable index with reinvested income was up almost 45%. This year the index began at a depressed 176 and the index including reinvested income was at 428. Each achieved a record gain by July 2009, when the index reached 238 and the index with reinvested income hit 619. Subsequent gains are making 2009 the best year in the 14 year history of the Alerian MLP Index.
Both indices were started on the last day of 1995 and the long term track records are among the best for any industry group during this period. The compounded annual growth rate for the MLP Index has been 7%, while the index including reinvested income has had an astounding 16% growth rate. Even with high volatility in the last year, MLPs are still known for their low beta (i.e. volatility).
For those interested in participating in MLP growth by investing with a basket of companies, a new ETF is available. It's called JPMorgan (the manager) with a NYSE symbol - AMJ. It tracks the Alerian MLP Index (AMZ), valued at 10% of the index. Dividends are paid from net investment income. Tax hassle associated with owning limited partnerships is eliminated by owning shares in this ETF. For those who want to own individual company units, more than 50 MLPs are listed. Most transport oil, gas or coal. Average yields are near 8% and income is largely tax free (at least in the current year).
Disclosure: No positions