Income Growth Advisors, LLC’s Master Limited Partnership (MLP) asset class performance rose 9.14% in August. Our year to date our performance is up 31.47% — handily outpacing our two benchmarks.
Year to date, our IGA MLP returns outperformed the Alerian MLP Index by 10.09% and the S&P 500 Index up 22.79%. Since inception 12.31.2000, our MLP performance has annualized 22.11% before management fees. We have outpaced the Alerian Cap Weighted Index by 3.86% per annum and the S&P 500 by 17.08%, since inception.
After weakness last month, equity markets and MLPs rebounded. MLPs saw Kinder Morgan buy in its three subsidiaries KMP, KMR and EPB, signaling the pipeline giant envisions strategic benefits from a unified single company structure. I believe we will continue to see strategic acquisitions as MLPs seek to grow rapidly with the energy shale boom in the United States. This secular growth theme is both a beneficiary of and a refuge from international uncertainty like that emanating from the Ukraine and Middle East. Additionally, MLPs offer some of the most attractive income alternatives in a yield starved world.
Our investment methodology or stock picking discipline is very much like Warren Buffett’s. That is, we buy good franchises at a reasonable price. Warren Buffett a student and disciple of Benjamin Graham, evolved the Graham and Dodd methodology from buying extremely cheap companies “cigarette butts” to one focused on buying good franchises at reasonable prices. First, we use quantitative metrics to identify attractive total return MLPs prospects; then we look to buy those that are good durable growing franchises.
We recommend investing in MLPs directly through separately managed accounts and not through mutual funds or ETFs whose c-corp tax structure hurt fund holders’ returns.