Master limited partnerships (MLPs), largely oil and gas pipeline firms, have presented investors with bountiful returns over the past 10 years.

But these investments aren't without costs, The Wall Street Journal reports.

MLPs produced a stunning average annual return of 16 percent a year in the decade ended July 31, according to the paper.

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Some high-quality MLPs yield more than 6 percent. And investors have sunk almost $8 billion into MLP-oriented mutual funds and exchange-traded products in the first half of this year, according to Morningstar.

But some industry promoters are worried about rising MLP prices and the falling quality of some offerings as investors flock to the sector, The Journal reports.

MLPs offer investors a tax advantage in that much of their income is paid as return of capital rather than as a dividend. Return-of-capital payments aren't taxed. Instead, they are taken off your cost basis. But that means you'll face a bigger capital gains tax hit when you sell.

The yearly tax issues that investors face are quite complicated, requiring a K-1 form rather than the standard 1099 for stocks and bonds.

Your accountant may charge $200 or more for filing K-1s for your MLP, Jim Oliver, a San Antonio accountant tells The Journal.

Rising interest rates could hurt MLPs too, as they do a lot of borrowing to fund their operations.

"MLPs as a group will be rolling over their debt into a higher-interest-rate environment," Warren Pies, a commodity analyst at Ned Davis Research, tells Barron's.

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