There are a growing number of options for mutual-fund investors wanting in on master limited partnerships but the decision on which path to take leads to different return profiles, according to the Wall street Journal
's Tom Lauricella
, in today's
Fund Fiend column
According to Lauricella, investors can bet on MLPs via traditional mutual funds, exchange-traded notes, and even exchange-traded funds and the payouts for these limited partnerships averaging around 7 percent of the share price a year, added up to 18 percent annualized over the last decade.
Distributions are usually considered a return of capital, so investors generally don't have to pay taxes until they sell the shares, and at that point, they may owe capital-gains taxes and income tax on past distributions, wrote Lauricella.
However, the tax rules also can require investors to file taxes in every state through which a MLP owns pipeline, which potentially adding upo to dozens of returns and making it difficult to own MLPs in individual retirement accounts. Putting MLPs in mutual-fund-like wrappers solves those problems, but creates others.
The article mentioned SteelPath
mutual fund offerings from an offshoot of MLP specialist Alerian
and the Alerian MLP ETF
, which is in the works from ALPS Advisors
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