Thanks to low U.S. Treasury yields since the start of the year, the master limited partnership (MLP) space has been an attractive investment spot for investors. While most traditional income asset classes produced miniscule yields, master limited partnerships (MLPs) lured investors with their higher payouts and stable cash flows.
Moreover, the space turned out to be a better choice given the equity market volatility this year (read: MLP ETFs: A Better Choice in a Market Slump?).
The popularity in the space was supported by a flurry of new product launches this year. There seems to be no slowing down of the trend, with the latest to join the bandwagon being InfraCap MLP ETF – the first pure play actively managed MLP ETF. The fund was launched on October 1st and trades under the ticker AMZA.
AMZA in Focus
The newly launched ETF looks to provide a high level of steady income and capital appreciation by providing exposure to a portfolio of high-quality, midstream energy MLPs and related general partners.
These midstream MLPs are primarily involved in the production, gathering, transportation, storage and processing of oil, natural gas, natural gas liquids and refined products.
The fund aims to generate an initial annualized yield of 8% and would require tax reporting on a single 1099 Form. This would save investors from filing complicated K-1s, which can be a hassle at tax time. Moreover, the fund might use options strategies, short selling or modest leverage to enhance returns (read: Leveraged ETF Launch: Non Energy MLP ETN Hits Market).
With this focus, Kinder Morgan Energy currently occupies the top spot in the fund with roughly 10% allocation, followed by Markwest Energy and Magellan Midstream with 7.5% and 7.2% allocation respectively.
As it is actively managed, the fund is relatively expensive charging 1.05% as annual fees.