Salient Partners has launched the Salient MLP Fund, the firm's second mutual fund focused on master limited partnerships (MLPs).
The Salient MLP Fund seeks to provide a high level of total return and emphasises making quarterly cash distributions to shareholders.
Its strategy entails investing at least 80 per cent of its net assets in equity securities of MLPs. The fund may also invest in securities of other energy companies and securities issued by open and closed-end investment companies, including money market funds, actively managed and index exchange traded funds and exchange traded notes, US government securities, debt securities, cash and/or other cash equivalents.
"We believe economic uncertainty and a low interest rate environment have caused an increased interest in yield-oriented securities," says Gregory A Reid, partner and managing director of Salient. "Many investors seeking attractive yields, potential inflation protection and distribution growth are turning to MLPs, which have demonstrated a compelling historical performance since 2006."
Focused on the midstream energy industry, with long-term, fee-based real assets that engage in the transportation and storage of natural resources, the Salient MLP Fund uses a C-Corp structure. The advisor intends to use leverage to minimise the effects of deferred tax liability accruing on any unrealised gains, realised gains and net income. Leverage will be approximately 25 per cent of the value of the fund's total assets. The fund is non-diversified, which means that it may invest in a limited number of issuers, and its investment may be in issuers of any market capitalisation ranges. Portfolio allocation will be focused in midstream MLPs that principally own and operate assets used in energy logistics.
"The fund's investment process puts emphasis on seeking cash flow stability, balance sheet strength and management experience," says Reid. "Daily liquidity, quarterly distributions and 1099 tax reporting are additional attributes of the fund's investor-friendly structure."
