Master Limited Partnerships are publicly traded partnerships, and this form of partnership requires two types of partners. A limited party and a party that is in charge of managing the affairs.
The tax benefits of the Partnership are combined in the MLP, this gives it an advantage over other Funds. This partnership does not have to pay taxes from its profit earned on the corporate level. In fact the Shareholders /unit holders are taxed on the distributions received by them.
They are rewarded with 6-7% average dividend profits and are given some other tax benefits as well. But to qualify for this status Master Limited Partnerships are required to be of specific businesses. By specific businesses we mean that they have to be engaged in the production or the dispensation of fossil fuels. Or the transportation of oil, natural gas, coal and other refined products across the country. Many Energy MPL 's are unique in terms of energy space because instead of making money on the quantity of material that travels through their pipelines or the instrumental transportation devices, they are isolated from the changes in the demand for actual price of that fuel.
So MLP ETF's are for those investors which are looking for a tax advantage investment. But one point to keep in mind is that though MLPs have tax advantages, calculating the taxes are extremely complicated.
30 Master limited Partnerships make up the MLPA, which are all engaged in various fields of production, processing, storage and mining of Natural resources. These funds also include the processing and exploration along with marketing across the country. Since energy supply is constantly being transported, processed, and stored to meet the growing demand of energy, the operators of the energy supply infrastructure gain huge profits from the continuing and increasing demand and usage of Energy as they are the owners of the same. This takes care of the price swings that are associated with this industry. The energy infrastructure sees additional investment opportunities in the MLP ETF's because they have relatively trustworthy and predictable cash flows. This answers for the growing popularity of these Investments, because the MLPs alone own and operate the vast energy infrastructure crisscrossing the country. The potential benefit of mlp mutual fund is that it provides the investor a prospective for a greater portfolio and creates a Toll way for the revenues generated from the pipelines and storage. This makes it a more stable income generating product. They act as hedges against the periods of high inflation as they have these hedges build in, in their contracts.
Global X MLP ETF [MPLA] seeks a yield that corresponds proportionally to the price and yield performance of the Solactive master limited partnership Composite Index that tracks a list of top holdings like the Magellan Midstream Partners L.P. (5.59%), Plains All American Pipeline L.P.(5.50%), Energy Transfer Partners L.P.(5.32%) and Buckeye Partners L.P.(5.31%) etc. as of March 31, 2013. This fund only charges investors 45 basis points a year in terms of fees.
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