Investors seeking less volatility can reap better returns in 2017 by allocating funds in sectors such as technology, biotech, energy and financials, which should generate above average performance.
Tepid growth in earnings and the economy had led investors to chase higher yields, as uncertainty about the incoming Trump administration remains.
As oil prices face additional upside and could reach a high of $60 per barrel, the energy infrastructure sector appears strong, said Rob Thummel, a portfolio manager with Tortoise Capital in Leawood, Kan.
The current yield of MLPs is approximately 7% and appears attractive when compared to other yield-oriented securities such as REITs and utilities, he said. The largest MLP holdings based on their category in Tortoise's MLP & Pipeline Fund includes Enterprise Products Partners (EPD) in the natural gas and natural gas liquids pipelines category, Magellan Midstream Partners (MMP) in the crude oil and refined product pipelines category and MPLX LP (MPLX) , the largest holding in natural gas gathering and processing.
Enterprise Products Partners generated a 6% yield as of January 11 and the company has a track record of steady distribution growth.
"We have increased distribution by 6.4% annually since 2004," Thummel said. "The company's diversified business model will benefit the growing U.S. supply of natural gas and natural gas liquids."
Magellan Midstream Partners generated operates a fee-based business model with strategic crude oil assets serving the growing Permian Basin.
MPLX generated its parent company, Marathon Petroleum (MPC) , announced a plan recently whereby MPC expects to sell midstream assets to MPLX, setting up the company's future distribution growth for many years, Thummel said.