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Master Limited Partnerships (Revisited)



In this 2015 special report, on the heels of a double-digit negative return year-over-year for MLPs, Abbot Downing revisits its position on this investment vehicle.

For the previous five years, the MLP space had enjoyed seemingly uninterrupted and outsized gains. MLPs delivered returns well in excess of their yield component as they capitalized on the growth opportunities presented to them by the oil and gas supply boom. However, the pendulum then swung in the other direction.

This report reviews the new state of the market and discusses what the future may hold for MLPs.


  • The price-demand continuum for commodities suggests more aggregate consumption for oil and gas will be an outcome of lower prices. All this bodes well for the space, but may take time to be appreciated by investors.
  • The recent correction may present tax loss harvesting opportunities; however, the current yield situation may point to opportunities as well.
  • As is usually the case, the opportunity presented by investments for gains come along with risks including the concentration risk associated with focusing on a specific sector, sensitivity to rising interest rates, liquidity and taxation risk. As always, MLPs are not exempt from the time-tested advice: caveat emptor.