Among the group of the MLP ETFs, the MLPA is the cheapest, taking into account the average management costs of exchange traded products belonging to the energy MLPs is nothing less than 80%. MLPA initiated by New York-based Global X on 4/19/2012 has an approximate accumulation of $5.5 million. This fund gives the investors a fabulous exposure of two main types of equities associated with the natural gas pipelines and petroleum transportation but the fund also provides exposure to equities belonging to the refining & distribution, exploration & production, and coal production.
In the foreseeable future the energy sector of the United States is expected to see a promising growth, as the economy is bound to progress in all sectors of the economy. Industrial output and expansion is grossly anticipated and the welfare of the demography would be expected to contribute its share of development into the strong and sturdy economy.
Branded as hedged investments, it is noteworthy to understand that these funds are not affected by the prices of the energy products. Their valuation only depends on the quantities of natural fuels they are able to supply throughout the networking of the country, how much supply they can cater to according to the needs of the growing economy and the places that they are able to reach. They are also recognized as funds that are capable of very high yields and very bright returns, along with the nature of being less volatile.
Sector allocations of the United States master limited partnerships fund shows 42.45% belonging to the Natural Gas Pipelines, 39.18% to the Petroleum Transportation, 6.12% to the Refining/Distribution sector, 4.96% to the Coal Production sector followed by the Exploration & Production and Oil & Gas sectors with a combined allocation of 7.29% as on 30 June 2013.
Interestingly the MLP mutual fund is found guilty of making a notorious use of the loop holes in the system. These funds use the C-corporations structures and are accountable for both the federal and state income taxes. Together the amount of tax to be paid is approximately 37% of the taxable income, which the shareholders are liable to pay on the dividend and gains received from the funds. Since they belong to the asset class they provide a quarterly income distribution. There is a low correlation of this fund with the S&P 500 thus providing a potential benefit of the diverse exposure to its credit. Petroleum and natural gas are those energy products that probably never will face a situation of low demands in their demand graphs. So seemingly the investments in this area are always required to increase at a stable rate in correlation with the stable increase in the demand for them.
The top ten holdings of the funds are MARKWEST ENERGY-PART UTS, BUCKEYE PARTNERS, MAGELLAN MIDSTREAM, ENERGY TRANSFER PARTNERSP and ENTERPRISE PRODUCTS PRTNR, WILLIAMS PARTNERS LP, ENBRIDGE ENERGY PARTNERS, ONEOK PARTNERS LP, KINDER MORGAN ENERGY PRTN and PLAINS ALL AMERN PIP respectively as on 9/18/2013 comprising of a share of 53% of the total assets belonging to the fund.
So it's great time for the MLP investment as booster yields and returns tend to attract the investors like the force of a magnet on small metallic nails!