For the last five years dating back from March of this year, Standard & Poor's MLP index returned 28 percent annually, compared with 22 percent for the 500-stock S&P index.
This performance has not gone unnoticed, and the number of MLP funds has grown in recent years.
The amount invested in MLP open-end and ETF funds increased from $2.7 billion at the end of 2010 to $32.9 billion at the end of last year, according to Morningstar.
There is no denying that MLPs have been a good bet for awhile now, said Evan Welch, chief investment officer for Antaeus Wealth Advisors in Boxborough, Mass. However, he fears that some individual investors may not understand that buying a peice of an MLP is different than buying the typical stock.
One difference is the investor is a limited partner, Welch noted (the general partners run the company). This has tax ramifications that the investor needs to be aware of, he said, whether the investor buys into an MLP stock or an MLP mutual fund. Depending on how the company or fund is structured, investors could be surprised by getting a K-1 tax form annually, and have to deal with capital gains issues, Welch said.
Others worry that with all the attention and controversy over corporations ducking taxes, that Congress may decide to eliminate the MLP corporate exemption.
Kelly said a change is always a possibility, but Tortoise keeps a close eye on Congress, and "we don't expect a change. Right now, it's going in the other direction,'' with the exemption expanded to include biofuel companies, she said.
Dan Pickering, a partner with Tudor, Pickering Holt & Co., Houston, believes Congress would be wary of fooling with an exemption that benefits, indirectly, so many senior citizens and retirees. These people vote, he noted.
Pickering likes the fundamentals of MLPs, so he is optimistic about their prospects going forward.
Kelly likes the outlook, too. She said that as of now, $125 billion is committed to be spent on new pipeline construction in North America through 2016.