Master limited partnerships: Is it a smart investment vehicle?

Haiwei Chen and Thanh Ngo

Journal of Commodity Markets, 2018, vol. 11, issue C, 22-36

Abstract: Master limited partnerships (MLPs) in the energy sector offer positive alpha and a beta lower than one in more recent period of 2001–2016 as oil prices experience a big upward swing. Further analyses confirm a negative relation between MLPs' alphas and their betas, consistent with the pattern documented by Frazzini and Pedersen (2013). MLPs provide no hedge against inflation risk or against a volatile stock market. Simulations show that these MLPs provide investors with higher returns, lower risk, and thus a higher Sharpe ratio than the traditional strategy of buy-and-hold the S&P 500 index fund.

Keywords: Master limited partnership; Alpha; Beta; Sharpe ratio (search for similar items in EconPapers)
JEL-codes: G11 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S2405851317300909
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jocoma:v:11:y:2018:i:c:p:22-36

DOI: 10.1016/j.jcomm.2018.02.002

Access Statistics for this article

Journal of Commodity Markets is currently edited by Marcel Prokopczuk, Betty Simkins and Sjur Westgaard

More articles in Journal of Commodity Markets from Elsevier
Bibliographic data for series maintained by Catherine Liu ().