Prudential Investments has launched the Prudential Jennison MLP Fund, which offers investors the opportunity to invest in master limited partnerships.
Prudential Investments is the mutual fund business of Prudential Financial, offering a range of open- and closed-end funds.
The Prudential Jennison MLP Fund is the second mutual fund launched in 2013 by Prudential Investments that is designed to give investors an opportunity to participate in the expanding need for enhanced infrastructure, this time with a focus on businesses that support increased US energy production. The new fund, which invests in MLPs, follows the recent launch of the Prudential Jennison Global Infrastructure Fund (PGJAX).
"The MLP fund provides investors with the potential to benefit from current income and long-term capital appreciation by capitalising on the rapid increase in energy production in the US, a trend that we expect will continue based on current market conditions," says Stuart Parker, president of Prudential Investments.
The fund is sub-advised by Jennison Associates' income and infrastructure team, led by portfolio managers Bobby Edemeka and Shaun Hong. The MLP investment strategy is a natural extension for the investment team, which currently manages equity income, utility, and global infrastructure. The team, which includes three analysts, has used MLPs in various investment strategies since 2006.
The fund management team currently expects to focus on midstream companies that are engaged in the transportation, storage, processing, refining, marketing, exploration and production of oil and gas or the mining of minerals or other natural resources. The fund will typically contain 30 to 50 holdings, focused in North America and will use the Alerian MLP Index as a benchmark for performance.
"Historically, MLPs have demonstrated low correlation to broader markets and low volatility compared to other sectors, offering investors diversification within their portfolios," says Hong. "A focus on MLPs provides an opportunity for dividend yields that are higher than other asset classes and could provide consistent income, given the long life span of many infrastructure investments."
