Midstream Energy & MLP
The strategy invests in a diversified portfolio of midstream energy companies, including corporations and partnerships, with the potential to deliver total return consisting of capital appreciation and income.
WHY COHEN & STEERS
Experienced global investment team
Experienced and dedicated global investment team with over 50 years of midstream energy & MLP investing experience
Unique and rigorous investment process
Utilizes proprietary resources and focuses on top-down energy cycle dynamics as well as comprehensive bottom-up security analysis and research
Strong market position
Our strong market position allows us to be nimble and to quickly identify alpha-generating opportunities in a broad universe
WHY MIDSTREAM ENERGY & MLPS
In high inflation environments, businesses with pricing power, high margins and fixed rate debt should outperform. Midstream energy companies typically offer all three
Attractive current income
Midstream energy and MLPs provide the potential for attractive current income, with possible tax advantages
Lower volatility energy exposure
Historically superior risk adjusted returns for investors looking for energy exposure with less volatility
The Cohen & Steers Midstream Energy & MLP Strategy invests in a diversified portfolio of master limited partnerships (MLPs) and midstream energy corporations with the potential to deliver total return consisting of both capital appreciation and tax-advantaged income.
We believe that the superior income and growth opportunity within the midstream energy universe is currently underappreciated by investors and—combined with attractive fundamentals—makes midstream a compelling investment opportunity. In addition, we believe optimal total return can be achieved through fundamental analysis focused on identifying midstream companies with the highest potential for distribution growth.
We believe midstream energy businesses are generally tied to tangible assets with cash flows that originate from volume-based usage fees and revenue that is often indexed for inflation. In our view, MLPs offer the potential for tax-advantaged income greater than that of other income-oriented securities such as utilities and bonds.
Investors’ search for diversification and inflation protection has put a spotlight on infrastructure, made brighter by massive public investment programs and the accelerating transition to a digitized, decarbonized economy.
August 2023 | 1 min
WHY INVEST WITH US
Delivering value to our clients
Cohen & Steers has invested in midstream energy companies and MLPs since 2004. Our dedicated Midstream Energy investment team leverages Cohen & Steers’ entire Global Real Assets platform of investment professionals, including daily collaboration with the firm’s global listed infrastructure, “best of energy” specialists and real asset investment teams. With deep experience in midstream energy investing, our team brings over 40 years of combined experience and provides meaningful insights into local companies through on-the-ground research, consisting of traveling to visit assets and companies, attending relevant conferences and maintaining a direct line of communication with management teams.
An experienced team
+3 analysts and associates
We believe an active, disciplined relative value approach to managing midstream energy and MLP assets, grounded in rigorous bottom-up fundamental research and incorporating top-down energy cycle dynamics, has the potential to generate alpha while providing portfolio diversification.
We believe the midstream energy and MLP markets are inherently inefficient, creating opportunities to add value through active management.
Cohen & Steers has a dedicated real assets platform with experienced teams that touch all aspects of the energy value chain.
We leverage the firm’s energy-focused investment talent.
An internal cross-strategy working group includes members of the global listed infrastructure, midstream, commodities, macro, real assets and natural resource equities teams.
Our investment process
We adhere to a disciplined, fundamental, relative value-based approach to investing in midstream energy and MLPs. Our approach to investing employs a robust investment philosophy and a repeatable process.
The team evaluates and analyzes global energy supply and demand trends, reviews short- and long-term price targets and identifies pertinent catalysts and risks to our thesis. We identify key themes or drivers specific to North American midstream businesses to establish subsector views and positioning.
Our analysts are focused on bottom-up financial and security-level analyses. We maintain ongoing dialogue with senior management, perform regular asset tours with operational employees and focus on corporate governance and the alignment of interests for all companies in our universe.
We use proprietary financial models that project key financial criteria to evaluate every company on two core valuation methodologies: three-stage discounted distribution model (DDM) and net asset value (NAV).
A dedicated risk management team provides stress testing and other proprietary risk tools that are integrated into the investment process.
Need to contact us?
We’d be happy to answer questions about our investment solutions or any corporate-related inquiries.
We consider the information in this communication to be accurate, but we do not represent that it is complete or should be relied upon as the sole source of suitability for investment. Investors should consult their own investment professional with respect to their individual circumstances.
Past performance does not predict future returns. Risks involved with investment, including potential loss of capital, are substantial and should be carefully considered. The views and opinions are as of the date of publication and are subject to change without notice. There is no guarantee that any historical trend illustrated above will be repeated in the future, and there is no way to predict precisely when such a trend will begin. There is no guarantee that a market forecast made above will be realized. Active management is not guaranteed to outperform the broader market index.
Important Risk Considerations: Investing involves risk, including entire loss of capital invested. There can be no assurance that the investment strategy will meet its investment objectives. Diversification is not guaranteed to ensure a profit or protect against loss. An investment in MLPs involves risks that differ from a similar investment in equity securities, such as common stock, of a corporation. Holders of equity securities issued by MLPs have the rights typically afforded to limited partners in a limited partnership. As compared to common shareholders of a corporation, holders of such equity securities have more limited control and limited rights to vote on matters affecting the partnership. There are certain tax risks associated with an investment in equity MLP units. Additionally, conflicts of interest may exist among common unit holders, subordinated unit holders and the general partner or managing member of an MLP; for example a conflict may arise as a result of incentive distribution payments. In addition, there are several specific risks associated with investments in the energy sector, including the following: Commodity Price Risk, Depletion Risk, Supply and Demand Risk, Regulatory Risk, Acquisition Risk, Weather Risks, Exploration Risk, Catastrophic Event Risk, Interest Rate Transaction Risk, Affiliated Party Risk and Limited Partner Risk and Risks of Subordinated MLP Units. MLPs which invest in the energy industry are highly volatile due to significant fluctuation in the prices of energy commodities as well as political and regulatory developments. MLPs are subject to significant regulation and may be adversely affected by changes in the regulatory environment including the risk that an MLP could lose its tax status as a partnership. MLPs may trade less frequently than larger companies due to their small capitalizations which may result in erratic price movement or difficulty in buying or selling. Once a shareholder's adjusted cost basis has been reduced to zero (due to return of capital), any further return of capital will be treated as a capital gain. MLPs may have additional expenses, as some MLPs pay incentive distribution fees to their general partners. The value of MLPs depends largely on the MLPs being treated as partnerships for U.S. federal income tax purposes. If MLPs were subject to U.S. federal income taxation, distributions generally would be taxed as dividend income. As a result, after-tax returns could be reduced, which could cause a decline in the value of MLPs. If MLPs are unable to maintain partnership status because of tax law changes, the MLPs would be taxed as corporation and there could be a decrease in the value of the MLP securities.