Why You May Need MLPs in Your Portfolio in 2017

By Andrea Coombes via Iris.xyz

For most investors, the initial appeal of master limited partnerships, or MLPs, is their potential to produce steady income over time. After all, these unique instruments—the majority of which deal in the pipelines that transport oil and natural gas—historically have offered a consistent annualized yield of about 6%*.

Yet the benefits of MLPs go beyond their income-producing qualities alone. In fact, MLPs exhibit some of the qualities of fixed-income, real assets and equity investments, combined. While the value of bonds can be eroded by rising interest rates, MLPs generally exhibit a resistance to that concern. MLPs also have potential inflation protection, with their income stream generally closely aligned with increases in costs. Finally, MLPs are equities, traded on exchanges, and their total returns are in line with those of traditional equities. In other words, MLPs have some benefits of equities, real assets and bonds.

But, you may well ask, why now? What is it about 2017 that makes MLPs a particularly attractive investment this year? Let’s look at three main reasons.

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