1. Zak Brown UBS Private Wealth Management Current Opportunities in MLPs
The Errico Group June 2012
Zak Brown

2. Current Opportunities in MLPs
What's occurred?
Master Limited Partnerships currently offer a unique buying opportunity given their
mean reversion behavior to various other yield products – namely Treasuries and
Baa bonds.
Spreads today have widened dramatically in response to risk aversion that is concerned with
both credit markets and commodity prices.
MLPs are yielding a premium not seen since the credit crisis in 2008 despite a much
healthier environment.
What's Different versus 2008?
MLPs have deleveraged and successfully refinanced the cost of capital
Credit markets are functioning
Current issues are political in nature and not questions of corporate solvency
Distribution growth is healthy regardless of commodity weakness & cyclical slowdowns 1

3. Comparative Returns through Market Dislocations
12 Month Forward Returns when Breeching 400bp over Treasuries:
September 9th, Beginning of Lehman Collapse
AMZ Index %
SPX Index %
MSCI World %
May 25th, 2010… Beginning of Greek Default
AMZ Index %
SPX Index %
MSCI World %
Peak to Trough Declines:
October 11th, March 5th, 2009
AMZ Index %
SPX Index %
MSCI World %
Comparative Returns through Market Dislocations 2

4. 3

5. MLPs Outperform in a Recession4

6. 10yr Total Return Analysis vs. S&P 500 & Ten Year Treasury

7. MLP Relative Value MLPs currently trade 444bp
wider than 10yr Treasuries…
This gap represents a significant
dislocation relative to the 10yr
average of 320bp…
MLPs which typically trade in-line
on a yield basis with Baa bonds
have widened over that asset
class by 102.9bp 6

8. Low Correlation to
Broad Market and
Fixed Income 7

9. Distribution & Long Term Performance

10. 8

11. aUBS Master Limited Partnerships9

12. Overview

13. Investment Thesis aUBS Master Limited Partnerships • • • •
What are MLP's?
Structured as a limited partnership, not a corporation
Own, maintain and operate energy infrastructure in North
America
Issue units that are traded on public exchanges
Generate high free cash flow paid out quarterly to investors
Income and growth potential
Approximately $285 billion market cap as of 3/1/2011
Why own MLP's?
Unmatched total return value proposition
Attractive yield
Portfolio diversification
A lower risk (beta) way to invest in energy
Resilient business model during periods of economic weakness
Asset class is under-owned by institutions
MLP Description •
Structure -
An MLP is a publically traded partnership with assets, growth characteristics and risk tolerance levels that are different
from traditional corporations. The units or shares are registered with the U.S. Securities and Exchange Commission
and trade on a major exchange, generally the New York Stock Exchange. An MLP consists of a General Partner and
Limited Partners. Such an entity can qualify as an MLP as long as 90% of its income is qualified as being derived from the
transportation, storage, or processing of "natural resource" products. •
Taxation -
The major difference between an MLP and a traditional corporation is its pass-through tax treatment, which exempts the
MLP from taxes at the entity level and allows it to pass the taxes on to the investors of the MLP. The individual investor
benefits because in most instances, the distributions that are received are considered return of capital and therefore,
the taxes due on that portion of income may be deferred until the MLP is sold. •
Valuation -
Primary drivers of value are the perceived growth rate in cash distributions and the cash flow coverage of the total units
outstanding. MLPs that have the best opportunity to internally grow or acquire assets have historically been rewarded
higher per share valuations than those MLPs whose growth is perceived as limited. Growth in assets usually translates
into growth in an MLP's cash flow and consequently, growth in its ability to increase distributions. •
Function -
As a yield instrument, MLPs have often been compared to bonds and regarded as an attractive investment option for
investors seeking steady income. More recently, many MLPs have evolved into growth-oriented investments with the
sponsor or General Partner using acquisitions to drive growth.
aUBS Master Limited Partnerships 10

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