Master Limited Partnerships


Master Limited Partnerships (MLPs) are publicly-traded entities subject to the same accounting, reporting and regulations as a publicly-traded corporation. MLP’s are invested in all aspects of energy infrastructure, transportation, processing, refining, marketing and storage of the nation’s energy resources. These assets include major pipeline systems that deliver products such as natural gas, crude oil and refined fuels. Recent public offerings by master limited partnerships have been made in energy infrastructure including; liquefied natural gas terminals, gas-to-liquids technology, bio-fuel assets, renewable energy assets, and coal gasification projects.

For tax reasons, MLPs are required to distribute at least 90% of their taxable income to shareholders each year from operations. Investors can receive nontaxable income as a result of deductions and depletion allowances which “shelter” the income from taxation. MLPs investment returns have a low historical correlations to other asset classes which can result in an effective investment vehicle to improve a portfolio’s diversification and risk profile.

Master Limited Partnerships are a relatively small, narrowly defined, and concentrated asset class. Even though MLPs have positive investment characteristics, they must be weighed against potential risks including:

  • Commodity Price Risk
  • Correlation Risk
  • Liquidity Risk

It is important to determine what percentage of your investment portfolio should be invested in Master Limited Partnerships based on your investment objectives, risk tolerances and investment time horizon.

Investors are advised to seek competent financial, tax and legal advice concerning the decisions they make with their investments. Klayman & Toskes, P.A. can provide you with a free consultation concerning any securities industry violations related to the handling of your investments accounts by a full-service brokerage firm or registered investment advisor.

Information contained on this webpage is for educational purposes only
and should not be considered legal advice.
No Information contained on this website creates an attorney-client relationship.