Exchange traded funds that follow master limited partnerships, or MLPs, have been a popular draw for investors looking for attractive yields and an alternative energy sector play. Nevertheless, MLP ETFs come with their own quirks.

The Alerian MLP ETF (NYSEArca: AMLP), which comes with a 5.71% 12-month yield, has gained 14.4% year-to-date. AMLP has amassed $6.2 billion in assets under management, ranking it among the largest energy sector funds, behind the Energy Select Sector SPDR ETF (NYSEArca: XLE) with $7.6 billion.

The JPMorgan Alerian MLP Index ETN (NYSEArca: AMJ), which has a 4.50% 12-month yield and $5.9 billion in assets, is up 23.4% year-to-date.

Due to the way the MLP funds are constructed, there is a noticeable performance discrepancy. Ned Davis Research’s Neil Lesson points out that since MLP ETFs are structured as C-Corporations, the ETFs incur a deferred tax liability out of the returns every day, reports Brendan Conway for Barron’s.  Consequently, AMLP has a 0.85% expense ratio plus 4% fees listed as “other expenses.”

“Because of legislation forbidding open-end funds from owning more than 25% of their portfolio in MLPs, AMLP is structured as a C-corporation,” according to Morningstar analyst Abby Woodham. “Distributions from ETN competitors are taxed immediately, but the ETF structure passes the tax deferment benefits of MLPs to holders of AMLP.”

On the other hand, the exchange traded note does not have to hold the securities it tracks and just mimics the performance of the underlying index.

“Owners of AMJ simply pay ordinary income tax rates on distributions and capital gains rates upon the sale of shares,” Woodham said.