Are MLP's a good asset class in which to invest?

Question

It seems that Congress has given them an advantage over the treditional Corporation structure? Is there a quid pro quo... ie, is there an inherant payback that is coming that could crater these companies?

Answer 1

A consideration of investing in an MLP is the tax consequences. The distributions are fully taxed as opposed to normal dividend paying companies which are taxed at a favorable rate. It is the same with REITs. As an asset class for a diversified portfolio, maybe a little invested there would not be a bad idea as with REITs. But if capital growth is your objective, MLPs should be avoided because there will not be a great deal.

Answer 2

MLP does have an advantage over a corporation in that it is a pass-through entity for tax purposes. But this advantage sometimes turns into a nightmare when it comes to tax documentation. For a foreign investor, for example, investing in MLP units automatically qualifies as engaging in trade or business in the U.S., so the MLP is required to withhold income taxes on distributions (were it a corporation, this would be handled by stock brokers with no effort required from the company), and the investor may be required to file a tax return in the U.S. So the MLP must keep a close watch on which of the unit holders are foreign, collect the appropriate documentation (such as W-9 forms), and disburse distributions accordingly. This is especially important for publicly traded MLPs that have no control over who buys their units.

From the purely investment standpoint, MPLs are highly leveraged businesses that exhibit substantial sensitivity to interest rates and the prices of assets they own or operate (e.g., MLPs invloved in oil and gas production are very sensitive to oil prices).

Answer 3

No inherent advantage. Depends on assets in the struture; not the structure. If good oil/gas fields well managed - will do well. BGR is a closed end investmnet co that holds Oil MLPs

Answer 4

I'm not sure, but I can tell you where to find a guy that knows quite a bit about them.....go to yahoo/finance ...get a quote for GLW... then go to the " message board"... go through msgs 'til you find one by " c_h_a_r_t_n_y" Besides his holdings in GLW he has about six different MLP's that he knows inside and out...(mostly pipelines)
Post a question there and you will be " enlightened"

Answer 5

If by utilising one asset type you advise like small cap growth, international/foreign places, good bonds, then definite, you may diversify. the international industry, case in point, has its very own issues merely like united states of america's industry does now. Small cap growth are all having issues borrowing marvelous now by way of fact they are... smaller agencies! good value are sturdy yet do not return very plenty. nevertheless I positioned all my earnings there 2 years in the past and in comparison to all of us else i comprehend, i did not lose one penny.