Equity : Master Limited Partnership (MLP) Funds

About Master Limited Partnership (MLP) Funds

MLPs are publicly traded partnerships primarily operating businesses in the natural resources and energy industries. MLPs own real, hard assets critical to the U.S. economy. Energy MLPs are typically formed by larger energy companies to re-capitalize lower growth assets. They help to finance various portions of the crude oil and natural gas value chains. As shown below, they typically own transportation and storage assets in these chains, and also production assets within the natural gas value chain.

MLPs are a US-only investment, because one of their primary features is advantageous U.S. federal tax treatment. Typically, about 80% of their distributions are tax-deferred, though this can change when MLPs are included in pooled investment vehicles like closed-end funds.

The total return of MLP investments is typically based on their distributions and on demand for energy. Because they are highly concentrated in the energy sector, however, they can be more negatively affected by a downturn in the energy sector. In addition, their tax-advantaged distributions could be negatively affected by changes in the U.S. tax code regarding treatment of MLPs.

For more information, see the National Association of Publicly Traded Partnerships.

About Nuveen MLP Closed-End Funds

Nuveen currently offers one MLP closed-end fund.

The Nuveen MLP Total Return Fund (JMF) seeks to achieve its objective by investing primarily in a portfolio of master limited partnerships (“MLPs”) in the energy sector. The Fund believes that MLPs represent a timely investment opportunity since MLPs typically generate a high level of tax-deferred income and offer the potential for increased distributions and capital appreciation over time. To implement its strategy, the Fund’s portfolio management team combines its top-down strategic investment style with its rigorous, bottom-up investment process. The Fund seeks to identify MLPs that it believes have the most attractive current yields and total return potential. In seeking to mitigate certain key risks of MLP investing, the Fund may use various hedging techniques consistent with its top-down investment style with the goal of enhancing its risk-adjusted total return over the longer term.

Investor Profile

Are these CEFs right for you?

The features and investment objectives of these funds may be an appropriate investment for you if you are seeking the potential for:
  • Tax-advantaged quarterly distributions;
  • Capital appreciation and distribution growth over time;
  • Portfolio diversification and an investment that may serve as a hedge against inflation;
  • An efficient, single-investment opportunity providing access to a diverse portfolio of MLPs in the energy sector.

What are potential risks?

  • Tax Risks. These Funds invest primarily in MLPs that pay no separate corporate level tax because they qualify as partnerships under current tax law. A change in law or in the business of such MLPs that caused them to be treated as taxable corporations could negatively affect fund performance and/or distributions.
  • Energy Sector Risks. The Funds invest predominantely in MLPs in the energy sector. This concentration in the energy sector may present more risks than if the Fund invested in numerous sectors of the economy. A downturn in the energy sector could have a larger impact on the Fund than on a fund that does not concentrate in the sector.

In this section

MLP Funds

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