Seeking to capitalize on the earnings potential of the energy sector, another fund shop has launched a master limited partnership fund.
Salient Partners L.P.
, a $17.4 billion asset management firm, has launched the Salient MLP & Energy Infrastructure Fund II
This is the firm’s first mutual fund focused on master limited partnerships (MLPs) and energy infrastructure companies, giving investors the potential to capitalize on the investment opportunities available in this industry.
According to managing director Gregory Reid
: “The need for infrastructure construction in North America, the desire of Americans to achieve energy independence and recent discoveries of natural gas and oil reserves have all contributed to a growing MLP and energy infrastructure space.”
“By giving more investors access to this robust industry through an open-end fund, we are directly addressing the demand for yield-oriented securities, which has been fueled by economic uncertainty and historically low interest rates,” he stated.
Moreover, according to Reid, who is also president and chief executive of Salient’s MLP business, said that “MLPs (most of which own stable, fee-based real assets in the energy infrastructure industry) can generate yields of between 5 and 7 percent, which is higher than those of other income-oriented securities. MLPs eliminate the double taxation experienced by traditional corporations by allowing for pass-through income, which may lead to higher after-tax returns. “
Company Press Release
SALIENT LAUNCHES SALIENT MLP & ENERGY INFRASTRUCTURE FUND II AND ANNOUNCES QUARTERLY DISTRIBUTION OF $0.125 PER SHARE FOR THE QUARTER ENDED NOVEMBER 30, 2012
HOUSTON – November 16, 2012 – Salient Partners L.P. (Salient), a $17.4 billion asset management firm, has launched the Salient MLP & Energy Infrastructure Fund II (Class A Ticker: SMAPX, Class C Ticker: SMFPX, Class I Ticker: SMLPX). This is the firm’s first mutual fund focused on master limited partnerships (MLPs) and energy infrastructure companies, giving investors the potential to capitalize on the investment opportunities available in this industry.
The Salient MLP & Energy Infrastructure Fund II (the “Fund”) seeks to provide a high level of total return and emphasizes making quarterly cash distributions to shareholders. Its strategy entails investing at least 80 percent of its net assets in equity securities of MLPs and energy infrastructure companies of all market capitalizations. The Fund may, for example, invest in MLP Affiliates, C-Corps, Shipping LPs and Royalty Trusts, broadening the traditional range of energy infrastructure investment opportunities.
The Fund announced its first quarterly distribution of $0.125 per share for the period of September 19, 2012 to November 30, 2012.
The distribution for the quarter ended November 30, 2012 will be payable on December 5, 2012 to common stockholders of record on November 21, 2012. It is anticipated that a significant portion of this distribution will be treated as a return of capital for tax purposes. The final determination of such amount will be made in early 2013 when the Company can determine its earnings and profits for the 2012 fiscal year. The final tax status of the distribution may differ substantially from its preliminary information.
The Fund’s investments are concentrated in the energy infrastructure industry with an emphasis on securities issued by MLPs, which may increase price fluctuation. The value of commodity-linked investments such as the MLPs and Energy Infrastructure Companies (including Midstream MLPs and Energy Infrastructure Companies) in which the Fund invests are subject to risks specific to the industry they serve, such as fluctuations in commodity prices, reduced volumes of available natural gas or other energy commodities, slowdowns in new construction and acquisitions, a sustained reduced demand for crude oil, natural gas and refined petroleum products, depletion of the natural gas reserves or other commodities, changes in the macroeconomic or regulatory environment (including the risk that an MLP could lose its tax status as a partnership), environmental hazards, rising interest rates and threats of attack by terrorists on energy assets, each of which could affect the Fund’s profitability.
In addition, investing in MLPs involves additional risks as compared to the risks of investing in common stock, including risks related to cash flow, dilution and voting rights. Such companies may trade less frequently than larger companies due to their smaller capitalizations which may result in erratic price movement or difficulty in buying or selling.
Additional management fees and other expenses are associated with investing in MLP funds. The Fund is subject to certain MLP tax risks and risks associated with accounting for its deferred tax liability which could materially reduce the net asset value. An investment in the Fund does not offer the tax benefits of a direct investment in an MLP.
No fund is a complete investment program and you may lose money investing in a fund. The Fund may engage in other investment practices that may involve additional risks and you should review the Fund’s prospectus for a complete description.
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