Q: You talk a lot about MLPs and I want to invest some money in it. I have been doing some research to understand what they are but with so many out there, how do I decide which one to invest in. Some sites recommend Energy Transfer Partners but there are others that offer a much higher yield. Do I just go with the one that offers the highest yield. Do you have recommendations? I am looking to invest a about $10,000 – $5000 each into different MLPs.
A: Due to SEC regulations, we are not able to give advice on specific securities without first establishing a fiduciary relationship.
With that being said, here are some general thoughts:
An investor who is not capable of in-depth financial analysis is most likely always served best by diversifying. That means diversifying even within one specific asset class. In your case, if you’re looking for a way to own MLPs as an asset class, you may want to consider a more diversified approach than trying to pick winners. There are a number of different index funds that you can buy to gain access to MLPs. For example: MLPI, AMJ, AMLP. A quick internet search will turn up even a number more of them.
For most investors, it’s more prudent to diversify your exposure to an asset class rather than to try and pick winners on your own. Not even the pros can “pick the winner” all the time…