Assessing MLP Valuations With ETFs

MLPs don’t make their money based on oil or gas prices. Unlike other energy sector stocks, MLPs primarily deal with the distribution and storage of energy products, so their business model is less reliant on the commodities market since MLPs profit off the quantity of oil and natural gas they are able to move around.

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Other options in the MLP ETF arena include the Global X MLP & Energy Infrastructure ETF (NYSEArca: MLPX), InfraCap MLP ETF (NYSEArca: AMZA) and the Tortoise North American Pipeline Fund (NYSEArca: TPYP).

“Historically, yields have been attractive in this space, but the distributions are not guaranteed and there are a limited number of investment vehicles, which can lead to capacity concerns. Because of the unique tax considerations and risk factors associated with MLPs, investors should consult their tax advisors to be sure MLPs are appropriate for their tax situations,” according to part of a Wells Fargo note posted by Barron’s.

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