Diversification is an important part of a sound investment strategy.
Yet achieving true diversification requires investment vehicles
that have low correlation to one another—in other words, they
don’t react in a similar manner to market developments. During
periods of significant economic growth, typical investments tend to
demonstrate significant correlation, even across dissimilar industries.
Investments that are minimally correlated with the market as a whole
are challenging to find. This, plus a history of strong returns, may
explain a growing interest in investments known as master limited
partnerships (MLPs). In this article, we will provide an overview of
what MLPs are, their potential benefits, risks and tax treatment, and
the vehicles available for investing in them.