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Master Limited Partnerships (MLPs)

General discussions about equity high-yield income strategies
sackofspuds
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Master Limited Partnerships (MLPs)

#439916

Postby sackofspuds » September 5th, 2021, 11:49 pm

Anyone looked at these for income?

Good article here from June 2020:
https://citywire.co.uk/investment-trust ... e/a1382823

There are a few ETFs out there. They track Master Limited Partnerships ("MLPs") that are listed and domiciled in the United States and that derive the majority of their revenues from activities relating to owning and operating assets used in energy logistics including, but not limited to, pipelines, storage facilities and other assets used in transporting, storing, gathering, and processing natural gas, natural gas liquids, crude oil and/or refined products.


There's one from L&G in USD:
L&G US Energy Infrastructure MLP UCITS ETF USD Dis (MLPI) - https://www.google.com/finance/quote/MLPI:LON
or GBP:
https://www.google.com/finance/quote/MLPX:LON

It tracks the Solactive US Energy Infrastructure MLP Index TR (the "Index"). The Index is designed to be a representative benchmark for Master Limited Partnerships ("MLPs")

Here's the index it tracks:
https://www.solactive.com/Indices/?index=DE000SLA9US4
The index is calculated as a total net return index (TR) in USD and will be rebalanced semi-annually.
There are 16 companies in the index.

These MLPs pay out very large dividends - circa 10%.

Now of course the Solactive index is a total return index so dividends reinvested. However, the ETF does pay dividends:
https://fundcentres.lgim.com/uk/en/fund ... LP/#Income
Went ex div 10 June and paid out 569c per share. On 9 June the share price was $5.03 so the divi doesn't make sense. It's up 62% in the last year.

The Invesco Morningstar US Engy Infra MLP ETF Dist tracks the Morningstar MLP Composite Index:
https://www.google.com/finance/quote/MLPD:LON

From what I can tell from https://etf.invesco.com/gb/private/en/p ... nformation it distributed 0.7593 per share in June 2021. Went ex div on 17 June. On 16 June share price was circa $41. So 1.85% in that quarter. Share price is down 13% since then but up 42% in the last year. The accumulation version MLPS is up 58% in the last year.

There's another one from Alerian:
https://www.google.com/finance/quote/MMLP:LON
Up 41% in the last year. Pays over 7% yield according to this:
https://www.hanetf.com/product/9/fund/a ... s-etf-dist

Lootman
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Re: Master Limited Partnerships (MLPs)

#439917

Postby Lootman » September 5th, 2021, 11:57 pm

Before you do anything else with these, make sure that you understand the tax implications. The distributions that they make are not dividends but rather a combination of various cashflows such as returns of capital, gains, depreciation and so on. They issue K-1 tax statements, often months after the tax year ends, and you have to make sense of them. Moreover the tax year those statements report on is different from a UK tax year.

sackofspuds
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Re: Master Limited Partnerships (MLPs)

#439967

Postby sackofspuds » September 6th, 2021, 9:40 am

Lootman wrote:Before you do anything else with these, make sure that you understand the tax implications.


I did read the warning that they rely on a tax break in the US and that tax rule could change in future. I am a bit confused about the L&G one because it tracks a total return index. The way I understand total return is that it includes distributions. So I had assumed the L&G one didn't pay a dividend. Yet it seems to.


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