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How do folks handicap legislative risk, relative to MLPs' passthrough tax structure? Seems like with energy prices so low, and so much fixed-investment now in place for N. American energy, a "green" President HRC -- especially since so many of the folks in states which have a lot of carbon-energy jobs tend also to be "red" States. Perhaps more to the point, energy industries probably have not contributed sufficiently to the Clinton Foundation..
Of course, any change would have to go through the buffoons in Congress -- which seem unable to get ANYTHING done. But from HRC's political calculus, might she see scuttling MLP tax status as:
a)an ability to burnish her 'green' credentials/supporters, b) use the higher tax revenues to subsidize the UCA (UN-afford. Health Act) and/or "green industry" jobs. c) shrink the wealth of an industry which generally opposes her environmental posturing d)Help out her Arab emirate contributors, who would like to see US oil prod. curtailed e)Rectify the tax "unfairness" of MLP holders not paying tax today on cash-income received today (i.e. the current MLP tax status).
None of the above are concerned with what is best govt policy, or the adviseability of US energy independence. Gawd knows those factors won't enter into the political triangulation.
In the vein of "a fresh look" at MLPs, I was doing some semi-purposeful browsing around this past weekend and came upon a change in June re. how FSDIX will be allocated, viz. the addition of MLPs to the dvd-paying stock sleave (up to 10%, oh yes). Fidelity is thinking of it as a strategy "enhancement":
Joanna Bewick on upcoming enhancements to the fund:
"In June 2016, a new out-of-benchmark subportfolio providing dedicated exposure to MLPs – master limited partnerships – will be created within the fund's dividend-paying equities allocation. This as of yet unfunded subportfolio will allow Ford and me to opportunistically allocate as much as 10% of fund assets to MLPs.
"An MLP combines the benefits of a limited partnership – a business structure wherein taxes apply only to unitholder distributions and not to corporate-level profits – with the liquidity of a publicly traded company. We think MLPs are a potentially rich source of investment yield as well as predictable and stable cash distributions. Most often, MLPs are backed by energy companies, with typically modest organic revenue growth that can increase alongside inflation; thus we believe MLPs also offer potential for capital appreciation.
"In our view, the addition of the MLP subportfolio can help improve the fund's risk-adjusted returns by providing key diversification benefits. Further, this change may offer the fund a diversifying source of alpha in keeping with its mandate to deliver non-bond income along with capital-appreciation potential.
"Nathan Strik, a 10-year energy veteran with 15-years of industry experience, has been appointed portfolio manager for the new MLP subportfolio.
"We believe these changes should improve our asset allocation flexibility and allow us to take greater advantage of the investment expertise of Fidelity in positioning the fund to better meet our shareholders' expectations.
"For more than 10 years, the fund has offered a compelling option for non-bond, income-seeking investors, in our view. Our goal with the addition of this new MLP subportfolio is to help make the fund an even more compelling investment option for the next 10 years – and beyond."
I hope this isn't redundant; I don't recall anyone on the Board posting about it.
Comments
How do folks handicap legislative risk, relative to MLPs' passthrough tax structure? Seems like with energy prices so low, and so much fixed-investment now in place for N. American energy, a "green" President HRC -- especially since so many of the folks in states which have a lot of carbon-energy jobs tend also to be "red" States. Perhaps more to the point, energy industries probably have not contributed sufficiently to the Clinton Foundation..
Of course, any change would have to go through the buffoons in Congress -- which seem unable to get ANYTHING done. But from HRC's political calculus, might she see scuttling MLP tax status as:
a)an ability to burnish her 'green' credentials/supporters,
b) use the higher tax revenues to subsidize the UCA (UN-afford. Health Act) and/or "green industry" jobs.
c) shrink the wealth of an industry which generally opposes her environmental posturing
d)Help out her Arab emirate contributors, who would like to see US oil prod. curtailed
e)Rectify the tax "unfairness" of MLP holders not paying tax today on cash-income received today (i.e. the current MLP tax status).
None of the above are concerned with what is best govt policy, or the adviseability of US energy independence. Gawd knows those factors won't enter into the political triangulation.
https://fundresearch.fidelity.com/mutual-funds/analysis/316145887 I hope this isn't redundant; I don't recall anyone on the Board posting about it.