Capture the Boom in U.S. Oil with MLP ETFs

The surge in unconventional oil production will help the U.S. become the largest oil producer in the world. Investors can capitalize on the oil boom through master limited partnership exchange traded funds that track the growing infrastructure network needed to accommodate increasing oil output.

MLPs are businesses that engage in energy infrastructure activities, including the processing, storage and transportation of minerals and natural resources. While MLPs are associated with the energy sector, they have a low correlation to energy prices, along with the broader equities markets, as the assets act like a toll-road in the nation’s energy infrastructure.

The growth in the MLP marketplace is tied to growing demand for energy and its availability from newly developed sources. Consequently, the asset provides a reliable income source as companies participate in the country’s energy infrastructure.

As a partnership, MLPs act as a pass-through entity where the company’s income or losses pass through to individual owners of the partnership. Most investors enjoy MLPs because of the investment’s attractive quarterly cash distributions.

MLPs are particularly attractive for fixed-income investors since MLPs are required under their partnership agreements to distribute all available operating cash flow each quarter, which produces a reliable stream of income.

Source:  Tom Lydon, ETF Trends

******

Global X MLP (MLPA) and Global X MLP & Energy Infrastructure (MLPX) are components of the D2 Capital Management Multi-Asset Income Portfolio.  They yield 5.78% and 2.56, respectively (as of 4 December).

The views expressed here are that of myself or the cited individual or firm and do not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

 The Jacksonville Business Journal has ranked D2 Capital Management in the top 25 of Certified Financial Planners in Jacksonville.  The Firm is also a member of the Financial Planning Association of Northeast Florida, the Jacksonville Chamber of Commerce, the Southside Businessmen's Club, and the Beaches Business Association.