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Pipeline Partnerships Better Bet Than REITs Now, Adviser Says

Thursday, 14 Jun 2007 | 4:22 PM ET

Christopher Errico, a financial adviser for Morgan Stanley Global Wealth Management, told CNBC’s “Street Signs” that he likes energy pipeline partnerships, but not Real Estate Investment Trusts.

He said pipelines take little or no commodity risk and are a monopoly business.

Managing for the Rich
Looking at pipeline MLPs and other investment opportunities, with Christopher Errico, Morgan Stanley Global Wealth Management financial advisor and CNBC's Erin Burnett

“As long as there’s liquid or gas flowing through the line, they generally do very well,” Errico said Thursday. “They pay great dividends – 5% - 7% in some cases.”

He said REITS are fully valued and sensitive to rising interest rates, making them poor bets in the current market.

“The (market) volatility is unprecedented,” Errico said. “You have to look at what you own and have knowledge of what you own…Mind your multiples, figure out what’s cheap or expensive. If you have great stocks, you have to stick with them.”

He said balance is the key to a successful portfolio. He generally recommends that his clients have about 15% of their holdings in foreign investments.

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  • Brian Sullivan is co-anchor of CNBC's "Street Signs."

  • Co-anchor of CNBC's "Street Signs," Amanda Drury is based at the network's global headquarters in Englewood Cliffs, N.J.