However, you lose the tax deferment benefits of holding an MLP.
K-1s can be fun if you use TurboTax.
Actually it's in my IRA and that's the best place for it. ETFs, MLPs are great places to park your money for good diversification. High yields and a basket of quality stocks. Not all of them are good. But most are fine.
Morningstar and most ALL analyst's are mostly full of dung. I've been an investor since 1967 I have OUTPREFORMED almost every analyst since 1982. Take Cramer for instance. He last week said to hold off on buying GE last week until earnings came out. I instead looked at GE and its huge valuation on a breakup of it's financial services and bought 3,000 more shares on Thursday. The problem with Morningstar and basically all of these services is that they are not focused on the whole picture. I will make a lot of money on AMLP. Why? because there is a huge need of MORE pipelines. You get a nice basket of them with AMLP. Do what you wish and if you follow these gangsters they will sell you the Brooklyn bridge. I don't believe ANY of them. That's why I make money. Look at the whole picture. Hardly anyone does.
not saying this makes it a bad investment -- if I was investing in an IRA it might make a lot of sense -- but it might work better for you, it might not.
"However, the fund has major drawbacks. AMLP is a corporation, not a fund registered under the Investment Company Act of 1940 like most ETFs, because open-end funds are not allowed to have more than 25% of their portfolio in MLPs. The fund is liable for taxes at the corporate level, which has caused AMLP to lag its underlying index by a staggering 8% annualized since inception through the end of February. With other investment options available that track the performance of MLPs much more closely, investors should carefully examine whether AMLP's costs are worth its benefits.
AMLP's lagging performance is a byproduct of how tax-deferred MLP distributions behave in a fund structure. MLP unitholders are liable for taxes on their share of the partnership's income every year. Fortunately, the bulk of MLP distributions is considered a return of capital because MLPs use depreciation to offset their net income. Instead being an immediately taxable event, distributions reduce an investor's cost basis. Taxes are only owed on the distributions when an investor sells their units. At that point, the IRS views the income as recapture of past depreciation deductions, and investors will owe their ordinary income rate. Functionally, the investor is able to defer paying taxes on distributions until they sell their shares.
Because AMLP is a corporation, the fund itself has to pay corporate taxes on the adjusted cost basis when it sells underlying investments or if it ever liquidated. AMLP accrues for this future tax liability in its net asset value, which means AMLP must give up about 38% of its return in every year when the fund's total return is positive. Because MLPs have done so well in recent years, this tax drag caused the fund to significantly lag its benchmark. On the flip side, AMLP will decline less than its ETN competitors in a down period because it can reverse its tax liability reserve."
the higher yield is simply due to leverage. I own EPD in a margin acct already, plus I am saving fees + tax inefficiency.
You may be right, but my opinion is mine and your is yours.
Neither one is right, neither one is wrong. As far as buy and
hold and let your heirs enjoy the windfall, the step up basis
is in the cross hairs of lawmakers and may not be an option
in the future.
I think we are looking at some real nice gains ahead as oil and nat gas go up more drilling will come back online and therefore a need for more pipes to transport it all.