The term MLP generally only applies to businesses related to the use of natural resources; for example, the transportation or extraction of natural gas. In some instances, real estate can be MLPs. [All About MLPs.]
The big draw for MLPs is that they do not incur income taxes. Although, 90% of the MLP’s income needs to come from real estate, commodities or natural resource services and operations to qualify for the tax perks. It should be noted that MLPs may not be suitable for IRAs and other tax-sheltered portfolio (as always, contact your accountant for additional details on appropriateness and other tax issues). Additionally, MLPs have a low correlation to the rest of the U.S. stock market and U.S. Treasuries. [5 ETFs Demystified.]
For more information on master limited partnerships, visit our MLPs category.
There are a number of MLP ETNs available in addition to AMJ:
- Credit Suisse Cushing 30 MLP Index (NYSEArca: MLPN)
- UBS E-TRACS 2x Long Alerian MLP Infrastructure ETN (NYSEArca: MLPL): annual leveraged yield is 12.23%
- UBS E-TRACS Alerian MLP Infrastructure ETN (NYSEArca: MLPI): yield 6.87%
- UBS E-TRACS Alerian Natural Gas MLP ETN (NYSEArca: MLPG): yield 6.56%
Max Chen contributed to this article.