What is a master limited partnership?

A master limited partnership (MLP) is a type of limited partnership that can be publicly traded and is typically listed on stock exchanges. This structure combines the tax benefits of a partnership with the liquidity of publicly traded securities, making it an attractive investment vehicle for both individual and institutional investors.

In a master limited partnership, the general partner manages the operations of the business, while limited partners contribute capital and receive distributions without being involved in day-to-day management. The income generated by the MLP is typically passed through to the partners, allowing for favorable tax treatment.

The characteristics of MLPs, such as their ability to raise capital quickly through public offerings and trade on major exchanges, distinguish them clearly from traditional partnerships that do not offer public trading options. This makes the concept of a master limited partnership unique and appealing for investment.

While a master limited partnership may have certain investment focuses—common ones include energy and natural resources—it is not limited solely to agricultural investments, nor does it specifically pertain to perpetual life, which is not a defining feature of MLPs.