Swank Capital announced the launch of a open-end mutual fund that invests in master limited partnerships (MLPs) in the midstream energy infrastructure area. The Cushing MLP Premier Fund (CSHAX, CSHCX, CSHZX) was made available to investors on Oct. 19 and was publicly announced on Wednesday. The advisor is SwankEnergy Income Advisors, LP, a subsidiary of Swank Capital.
One of the first open-end mutual funds to invest in the MLP sector, the fund invests primarily in midstream MLPs that build and operate pipelines and storage facilities for the transport of domestic energy supplies. According to Swank, MLPs own the infrastructure that connects crude oil, coal, natural gas and other energy resources to refineries and other end users.
Jerry V. Swank, portfolio manager of the fund and founder of Swank Capital, said in a statement, “MLPs, as represented by The Cushing 30 MLP Index (MLPX), have had one of the best risk adjusted returns of any asset class over the last ten years ending September 30, 2010. They've provided investors a combination of high income and growth sustained by a continually increasing need for energy infrastructure in the U.S. In addition, MLPs have a long history of growing distributions faster than inflation, which has made them useful as a potential inflation hedge."
The company believes that “midstream energy MLPs are positioned to benefit from an increasing need for new pipelines and storage facilities as demand for new domestic sources of oil and natural gas continues to grow.” According to the company, the business model for MLPs is attractive in this arena because fees are charged for storage and for transportation; contracts are long term; and generally demand is stable. Such MLPs also have minimal commodity price risk exposure and moderate sensitivity to economic shifts.
Swank adds that the fund is designed for boomers who are looking for stable sources of income, with its “potential for stability and tax-advantaged quarterly dividends."