The fund, which invests in the US energy infrastructure sector, is the first of its kind to be distributed in the UK having previously been confined to the US.
Master Limited Partnerships (MLP) are publicly traded on US securities exchanges. They combine the tax benefits of a limited partnership with the liquidity of publicly traded securities.
To qualify for MLP status the partnership must generate at least 90% of its income from midstream activities related to the production, processing or transportation of oil, natural gas and coal. Instead of shares, MLP interests are denominated in units, and instead of dividends, investors receive quarterly distributions.
MLPs own real assets therefore benefit from a rising value over time without the risks associated with commodities. The fund can be used as an effective hedge against inflation as businesses that MLPs invest in will normally include inflation-plus pricing, meaning that MLPs can offer rises faster than inflation.
Credit Suisse has partnered with Cushing MLP Asset Management for this Index Fund. The fund’s performance and distributions are linked to the Cushing MLP Market Cap Index, which currently yields 5.6% and is Ucits compliant.
Harry Dickinson, partner, Harrington Cooper, said the UK market was in a good position to embrace MLPs due to the highly attractive yield and capital growth that they can offer to investment portfolios that are struggling to find both quality income and secular growth themes.
He said: “The Credit Suisse MLP Index Fund provides investors with access to the US shale gas revolution via exceptional high-yielding infrastructure assets, fundamental to the continued growth of the US oil and gas sector.”
