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Rating:INews: IRS Wants to Limit Fundsters' MLP Holdings Not Rated 0.0 Email Routing List Email & Route  Print Print
Wednesday, August 28, 2013

INews: IRS Wants to Limit Fundsters' MLP Holdings

News summary by MFWire's editors

Robert Gordon, chief executive of Twenty-First Securities Corp. and adjunct professor at NYU's Leonard Stern School of Business, penned a piece for InvestmentNews on the small minority of MLP funds that actually pass an IRS test while still having substantial exposure to MLPs.

Gordon found nine MLP funds, consisting of two ETFs, two closed-end funds and five open-ended funds that attempt to exceed the 25 percent threshold. Gordon writes that the prospectus for one of the funds says it keeps 80 percent of assets in MLP-related securities despite staying in the 25 percent threshold.

The question is, how do they manage to do it?

They put 25 percent directly in MLPs, Gordon writes, and the other 75 percent varies greatly from fund to fund. Some funds use derivatives to get MLP exposure. The IRS is proposing to limit the ability to use a wholly owned subsidiary to increase MLP holdings, Gordon writes.

Some of the open-end funds and ETFs he names are First Trust [profile] North American Energy Infrastructure Fund, Tortoise [profile] MLP & Pipeline Investor, FAMCO [profile] MLP & Energy Income Fund and Eagle [profile] MLP Strategy Fund.

To read more, click here.  

Edited by: Casey Quinlan


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