Swank Capital has launched The Cushing MLP Premier Fund, an open-end mutual fund which was made available to investors on 19 October.
The fund invests in midstream energy infrastructure master limited partnerships, which have historically provided tax-advantaged income to their investors.
Swank Energy Income Advisors, a subsidiary of Swank Capital, serves as the fund’s adviser.
The Cushing MLP Premier Fund is 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 transportation of domestic energy supplies critical to the nation’s economy. MLPs own the infrastructure that connects crude oil, natural gas, coal and other energy resources to refineries and other end users.
"MLPs, as represented by The Cushing 30 MLP Index, have had one of the best risk adjusted returns of any asset class over the last ten years ending 30 September 2010. They’ve provided investors a combination of high income and growth sustained by a continually increasing need for energy infrastructure in the US," says Jerry V. Swank, portfolio manager of the fund and founder of Swank Capital. "In addition, MLPs have a long history of growing distributions faster than inflation, which has made them useful as a potential inflation hedge."
Swank Capital 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. In addition, Swank Capital believes that MLPs offer an attractive business model to meet that demand: fees are charged for transportation and storage, contracts are typically long term and demand is generally stable. Furthermore, many midstream MLPs have minimal exposure to actual commodity price risk with only moderate sensitivities to most economic shifts.
"We created this fund to make MLP investing available to broad classes of investors," says Swank. "Increasingly, retiring baby boomers are looking for income and need investments that provide stable sources they can count on. We’ve designed our fund to meet that need by providing the potential for stability and tax-advantaged quarterly dividends."