It was more than two years ago that analysts at Robert W. Baird & Co. wrote a report outlining a set of guidelines that the MLP sector should follow going forward. The report, titled “Three Rules for the New MLP Playbook,” focused on key issues for MLPs to keep in sight as their goals for the future: simplification, consolidation and self-reliance.
Undoubtedly, progress has been made in this direction—but there’s still a lot of room to improve.
Today, for example, some of the top-rated MLPs may still be part of a “family” of MLP securities. For now, this obviously runs counter to a longer-term goal of simplification, under which fewer securities would exist and incentive fees would be eliminated. If adopted at some point, this would create an investment structure in which investors, managements and sponsors are all pari passu, or side-by-side in interest.