The primary reasons investors should consider MLP exposure are the ability to earn tax-deferred income in a taxable account and the diversification benefit that comes from the low correlation MLPs have to traditional equity asset classes.
MLPs have gained popularity in recent years as an area for investors to play the U.S. energy renaissance and capture high, growing income distributions. Although this broad asset class has a limited history of performance during rising rate cycles, there are reasons to hold on to these positions when rates begin to rise.
Read MoreHow to invest in energy MLPs using funds, ETFs
The most important reason is related to the way MLPs are structured for tax purposes. The distributions from MLPs are largely tax-deferred until the investor sells the position. As a result, liquidating a position would trigger a tax bill. However, if you were to hold the position until death, you would never end up owing income tax on those distributions.
Another reason not to fear MLPs is the high level of U.S. energy infrastructure buildout needed over the next three to five years, which should allow the best-positioned MLPs to continue growing distributions.