During the past five years, public master limited partnerships (MLPs) have delivered median total returns of 15.1% versus 3.4% for the S&P 500. MLPs have outperformed the S&P 500 benchmark for the past 10 years as well. Currently, 46 of 59 MLPs are energy-related (owning pipelines, gas-gathering systems, liquefied natural gas shipping assets, propane and coal), and more are likely coming to market. Why? "They have been able to provide better returns, and with lower risk, than the S&P 500 Energy Index," analyst Yves Siegel with Wachovia Securities told Houston Energy Finance Group members recently. But MLPs suffer from a paradox, he said. How can they grow if they do not reinvest their cash flow into infrastructure, but instead, have to pay it out in distributions to unit-holders? After all, those with the greatest distributions tend to trade at higher multiples. MLPs have to access growth capital, whether equity or debt, through the public markets, but Siegel thinks that's a good thing. For more on this, see the June issue of Oil and Gas Investor. For a subscription, call 713-260-6441.