MLP ETF - High Yield Tax Advantaged Exchange Traded Notes (ETNs)
Since there is no MLP ETF but exchange traded funds are what retail investors most often identify with, the next best investment option is an Exchange Traded Note (ETN) for Master Limited Partnerships. These ETNs offer tax advantages with high yields to boot.
MLP ETNs Combine Diversification, Yield and Tax Benefits
The beauty of the MLP ETNs, (note that there is currently no MLP ETF) is that Master Limited Partnerships in general are poorly understood and shunned by large institutional firms since they aren't allowed to hold these tax advantaged instruments in accounts like 401(k)s and pensions since they are already tax-advantaged to begin with. Historically, MLPs tend to yield between 7%-10% annually.
Investors should be aware of the nuances between an ETF and ETN. While many investors are familiar with ETFs, a key nuance with an ETN is that the investor is also taking on the solvency risk of the issuer. While many large institutions have already folded or been bailed out, there's no guarantee that an issuing company won't fail in the future. As such, investors should ensure the firm they're investing with is solvent as well.
Currently, in lieu of an ETF for Master Limited Partnerships, investors can consider the following exchange traded notes which focus solely on Master Limited Partnerships:
Real Estate Investment Trusts (REITs)
High Yield Bond ETFs
Utility Stock ETFs
High Yield ETFs (Stocks)
Return from MLP ETF (ETN) to Passive Income Home