67 WALL STREET, New York - August 7, 2012 - The Wall Street Transcript has just published its Investing Strategies Report. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
Topics covered: MLP Investing Strategies - Investing in Canada - Deep Value - Downside Protection
Companies include: ExxonMobil (XOM), ConocoPhillips (COP), Spectra Energy (SE) and many others.
A leading investment advisor from Chicago discusses the MLP asset class in this following excerpt from the Investing Strategies Report:
TWST: We are going to look more in-depth at the MLPs and advantages of that particular vehicle. What is it about MLPs that makes them an attractive investment option for you, and why do you like them?
Mr. Zayed: There are a couple of reasons why we like them. One is the ability to generate very attractive total returns. So a large part of the investments that we look at, we look to get a very competitive total return, which is a combination of income that an investment can derive as well as any appreciation. MLPs fall squarely into that category because historically, as is the case currently, they have very strong dividend yield, so that's the income component with the ability to find appreciation in the underlying stocks over time. Total return basis, it's very high in our list, number one.
Number two, they are not so correlated with traditional stocks. Clearly, one of the ways you can mitigate risk is to buy into a noncorrelated asset class. So they don't go that well with traditional stocks, even really, oil itself or gas itself, for that matter. So we like the noncorrelation aspect, and we like the total-return aspect, a big part of which is a high income element with the MLPs.
TWST: Do MLPs perform well in all kinds of markets or are there certain trends you see in the economy as a whole going on right now that position them even better?
Mr. Zayed: They've been very resilient frankly because they are not so correlated with much. They probably would take a bit of a hit if interest rates rose. They might have a little bit of sensitivity to that.
There were months even like a few months ago, I think in May, where oil went down, and MLPs sort of went down with it. So there is some correlation.
Historically, it's not been very high, but there can be times where it will correlate for no other reason than just broad market movements. But if you look at the longer stretches of time, the data, they've performed as good or better than just about in the other asset classes.
TWST: Many people assume that oil and MLPs go together. Are investors starting to get a better sense of what MLPs are and how they work?
For more from this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.