To the Editors:
After reading a Seeking Alpha November 5 article about APLS Alerian MLP [an exchange-traded fund that invests in master limited partnerships, discussed in “New Fund Added to the Model ETF Portfolio,” by James B. Cloonan, November 2010 AAII Journal] and the very high expenses of 37% on the profits, I wondered: Did you consider this when you added it to the Model ETF Portfolio?
James Cloonan Responds:
While I think the Seeking Alpha articles perform a service in pointing out the taxability of earnings received by APLS Alerian MLP , I think that it is a bit headline-seeking to suggest this tax expense (which all regular corporations have) is a fee paid to the fund managers as is the case in hedge funds. There is a letter from the fund printed in Ron Rowland’s column in Seeking Alpha, September 6, 2010, that deals with a number of the issues that have been raised. There are quite a few closed-end funds that hold master limited partnerships , and all of them are taxed as regular corporations.
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