Master Limited Partnerships (MLPs)

Transcription

1 Master Limited Partnerships (MLPs) Powering the Shale Boom June

2 Over 25 years of experience on Wall Street and 13 years investing in MLPs* We are a Registered Investment Advisor specializing in Master Limited Partnership (MLPs), Dividend Growth Strategies, and Quantitative Strategies. We focus on strategies that invest in securities with growing earnings and distribution profiles as they are highly correlated with superior total returns over the long term. We invest in Master Limited Partnerships which offer attractive yields, high distribution growth, and stable business models based on long term fee based contracts and toll road business models. We offer Master Limited Partnerships through separate account management and within broader portfolios. Income Growth Advisors, LLC clients include retirement focused investors, Registered Investment Advisors, investment professionals, and high net worth individuals. * Tyson Halsey, CFA, Income Growth Advisors, Managing Member June

3 What are Master Limited Partnerships (MLPs)? An asset class with stock and bond characteristics, tax advantages, and an exceptional performance history. MLPs own, operate, build and acquire transportation, storage and processing assets of natural resourcesprimarily natural gas and petroleum distillates. MLPs are publicly traded partnerships formed under the 1986 Tax Act. They pay no taxes at the corporate level allowing tax advantaged cash flows to flow to the unit holder. Source: Alerian and Salient June

4 An American Energy Renaissance with Decades of Shale Drilling Ahead Source: Enterprise products and Platts June

5 MLPs Powered through Distribution Growth We estimate MLPs will yield 6% and grow their distributions 7% per year for the next fifteen years. A one million dollar MLP portfolio could hypothetically yield $60,000 in year one and grow its tax advantaged distribution yield to $165,500 a year after 15 years. 6% Yield Growing at 7% Per Year 18.00% 16.00% 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 6.00% 6.42% 7.35% 6.87% 8.42% 7.86% 9.63% 9.00% 11.03% 10.31% 12.63% 11.80% 13.51% 14.46% 15.47% 16.55% 2.00% 0.00% This chart depicts the theoretical income generated from an MLP portfolio after 15 years assuming a 7% distribution growth rate and a 6% initial MLP portfolio yield portfolio. This illustration assumes no securities sales and does not adjust for taxes. June

6 Income Growth Advisors, LLC (IGA) MLP Strategy 21.61% annualized return since 12/31/2000* IGA Asset Class Performance Since 12/31/2000 Income Growth Advisors, LLC: MLP asset class total return has annualized 21.61% (13.42 years) before fees.* and has outperformed the Alerian benchmark by 3.88% per annum. and has outperformed the S&P Total Return since 2000 by 16.79%. Income Growth Advisors, LLC MLP asset class performance represents the returns of all MLP Investments in all accounts under management or control by Tyson Halsey, CFA since 12/31/2000. Five Year IGA MLP Capitalization Weighted Performance: IGA five year MLP asset class performance 33.12% annually before management fee. IGA MLP outperformance to AMZX 8.80% annually, since 5/31/2009. IGA MLP outperformance to the S&P 500 as measured by SPY is 15.03%. Attractive Tax Advantaged Income: Our Master Limited Partnership (MLP) strategy yields approximately 5.9%. *Asset class performance is the aggregate size weighted performance of all MLP holdings of all accounts managed by Tyson Halsey, CFA since 12/31/2000. Past performance is not a guarantee of future returns. See performance disclaimer and commentary on last page. **Alerian MLP Capitalization Weighted Total Return Index 12/31/2000 through 05/31/2014. ***Numbers are from Alerian.com and Yahoo Finance. June

7 12/1/2000 4/1/2001 8/1/ /1/2001 4/1/2002 8/1/ /1/2002 4/1/2003 8/1/ /1/2003 4/1/2004 8/1/ /1/2004 4/1/2005 8/1/ /1/2005 4/1/2006 8/1/ /1/2006 4/1/2007 8/1/ /1/2007 4/1/2008 8/1/ /1/2008 4/1/2009 8/1/ /1/2009 4/1/2010 8/1/ /1/2010 4/1/2011 8/1/ /1/2011 4/1/2012 8/1/ /1/2012 4/1/2013 8/1/ /1/2013 4/1/2014 IGA MLP Strategy performance versus Alerian MLP TR Index (AMZX) and S&P 500 Index (SPY) 12/31/2000 to 5/31/ ,000, ,000, ,000, ,000, S&P 500 Total Return Alerian MLP Return (AMZX) 8,000, ,000, ,000, ,000, June

8 IGA MLP Strategy Performance against Benchmarks Year to date, 1 yr., 3 yr., 5 yr., 10 yr, and since inception investment performance and outperformance of Income Growth Advisors, LLC Master Limited Partnership SMA asset class versus Alerian Capitalization Weighted Index (TR) and the S&P 500 Total Return Index (SPY): Returns are before management fee, but after commissions and custodial fees. Calculations based on Portfolio Center and tracked since 2000 at Halsey Advisory and Management, Elliot Davis Investment Advisors, and Income Growth Advisors, LLC S&P 500 is represented by performance of SPY ETF and not the actual S&P 500 Index prices from Yahoo! Finance. See performance disclaimer at end of the presentation. June

9 IGA MLP Strategy performance versus Alerian MLP TR Index (AMZX) and S&P 500 Index (SPY) 12/1/2000 to 5/31/2014 Tyson Halsey, CFA managed accounts with Master Limited Partnerships at Halsey Advisory and Management, LLC, Elliot Davis Investment Advisors, and Income Growth Advisors, LLC. Grayed areas represent period of firm transitions from Elliot Davis to Polaris Partners to Income Growth Advisors, LLC and performance is of those accounts which became Income Growth Advisors, LLC, clients. Before management fees. Asset class performance. Source: Yahoo! Finance and Alerian. June

10 Tyson Halsey, CFA Managing Member of Income Growth Advisors, LLC Winner USA Today-CNBC National Investment Challenge.* Conferred CFA designation Halsey has managed Master Limited Partnership (MLP) portfolios for over 13 years. Halsey has been using quantitative investment strategies for nearly a decade. Employed by Merrill Lynch, Alex. Brown & Sons, Deutsche Bank Alex. Brown: Financial services professional since Exposure to some of the most talented and recognized fund managers in the world. Founded Halsey Advisory and Management, LLC in Registered Investment Advisor, (RIA), Charleston, SC. Focused on securities with growing income profiles. Strategies designed to enhance retirement income. ADV available at SEC.gov. Income Growth Advisors, LLC 234 Seven Farms Drive, Suite 123-C Daniel Island, SC th@incomegrowthadvisors.com * USA Today/CNBC National Investment Challenge, options division Q1 1992, paper trading, 1078% for quarter. June

11 Performance Disclaimer The performance represented here is based on an asset class performance methodology. This methodology calculates the performance of all MLPs that are in the accounts controlled by Tyson Halsey, CFA since December 31, The performance deducts for brokerage fees, but does not deduct for management fees. Asset class performance is an industry recognized methodology, but one which does not qualify for GIPS--the Global Investment Performance Standard. GIPS endorses composite performance which tracks aggregate account performance. The benefit of Asset Class Performance is that it captures all accounts that own MLPs, so poor MLP picking in any account will hurt this performance. GIPS requires that an account s investment strategy must be clearly stated in advance that it is to be solely or primarily invested in a particular strategy to qualify for composite performance. Many customers may prefer not to commit solely to a single (MLP) strategy when they hire an investment advisors or portfolio manager. This was typically the case and policy Tyson Halsey, Managing Member of Halsey Advisory and Management, LLC which existed from September 1999 until June Though the SEC does not publicly validate or certify any firms returns, Halsey Advisory was subject to three routine SEC audits and in 2008 had the SEC carefully reviewed its advertised MLP performance. The performance calculation was made with Portfolio Center software. Portfolio Center is a Schwab Performance Technologies is an industry standard software. The performance history shown spans Tyson Halsey s employment by Halsey Advisory and Management, Elliot Davis Investment Advisors, Polaris Partners, Income Growth Advisors, and periods between investment firms. Given the size weightings, we believe there will be a high correlation of performance between our asset class performance and composite performance. We are working on Global Investment Performance Standards GIPS certification. June