Tortoise: A Steady Play on MLPs

08/02/2017 2:50 am EST

Focus: MLPS

David Fabian

Managing Partner, FMD Capital Management

The overarching benefit to holding master limited partnership (MLP) assets is the high income steam they pay relative to standard stock investments, asserts David Fabian, money manager and editor of The Flexible Growth & Income Report.

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This is why we are recommending purchase of a 5% position in the Tortoise North American Pipeline Fund (TPYP).

Our investment thesis is an intermediate to long-term alternative asset sleeve holding in TPYP in anticipation of additional price stability following the 2-year rout in oil prices.

We are opting a small position in TPYP for the low cost, diversification, and price performance in comparison to other funds in its peer group.

In addition, TPYP holds many of our favorite mid-stream MLP companies that have exhibited excellent price performance over time. We expect to add to TPYP if we continue to see the upward trend solidify in the price of the fund and in oil prices.

This new move will allow us to put a portion of our cash position to work in an area of the market showing more attractive value characteristics than most conventional equity indexes.

It’s also unique in that MLPs don’t feel the same effects of interest rates and overall stock market direction as many of the traditional ETFs we own in the model portfolio.

Having some exposure to an alternative asset class gives us a dynamic return profile, enhanced income, and sector-specific growth potential.

We will continue to keep you updated on any further changes to the portfolio as we make our way through these interesting summer months.

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