For the experienced Royalty Trust Investor, will you please comment on the pros and cons of a Royalty Trust such as PBT in a ROTH IRA. Are there special considerations such as Unrelated Business Taxable Income (UBTI).
Two of the newer trusts (PER and SDT) are structured as partnerships and CAN have UBTI. Whether they will or not depends what kind of income they have. Royalties, interest, dividends, etc, are not considered UBTI so if thats all they have then no UBTI. If they have operating income that would be a different story.
Do not confuse a trust with a MLP. The trust does not have UBTI but MLP does. I trade from within my IRA, and do not pay taxes. I do not withdraw enough to pay taxes. A Roth IRA, I understand, the taxes are pre paid so you do not pay taxes on the distribution. So Roth IRA do not have the restrictions I have. At tax time, I get from my broker the IRS form that shows the amount I paid myself. It is added to my other income. Since I am anti taxes, I do not by Canadian stock and any other foreign stocks. The dividends are taxed and the broker withheld the tax. It has happen with STO, and no more.
Just to be safe, check with your accountant.
I see that KYE is PBT's top holder, but PBT isn't in KYE's top ten holdings http://www.kaynefunds.com/KYE_FactSheet//KYE_factsheet.pdf
Kinder Morgan Management, LLC 11.0%
Enbridge Energy Management, LLC 9.0%
Plains All American Pipeline, LP 5.1%
Teekay Offshore Partners, LP 3.4%
Enerplus Corporation 3.1%
Navios Maritime Partners, LP 3.0%
ONEOK, Inc. 2.8%
Teekay Tankers Ltd 2.4%
Crescent Point Energy Corp. 2.3%
Williams Partners, LP 2.3%
Thanks for bringing KYE to my attention. It looks like an easy way to diversify. However, I'm concerned about the 4%+ expense ratio. http://www.kaynefunds.com/Kye_expenseratios.php Shares are also trading at a premium to NAV. It's better, imo, to just buy their top ten holdings on my own.