InfraCap MLP ETF (AMZA)

Overview

The InfraCap MLP ETF (AMZA) is an actively managed fund focusing on high-yielding Master Limited Partnerships (MLPs) and other energy infrastructure companies. It aims to provide current income, with capital appreciation as a secondary objective. It typically allocates its assets among MLPs, other energy infrastructure companies, and derivatives related to MLPs.

Reputation and Reliability

Active Alts is a smaller ETF issuer. AMZA's performance has been volatile and the company has a limited track record in managing high-yield, complex MLP strategies.

Management Expertise

The management team has experience in energy infrastructure and MLP investments, but their ability to consistently deliver strong risk-adjusted returns remains a point of scrutiny.

Goal

The primary investment objective is to generate current income; capital appreciation is a secondary objective.

Investment Approach and Strategy

Strategy: The ETF does not track a specific index. It employs an active management strategy focused on identifying undervalued MLPs and using leverage through options to enhance income. AMZA uses a covered call strategy on part of its portfolio.

Composition The ETF mainly holds common units of MLPs. Also includes other energy infrastructure companies and uses options and derivatives.

Market Share: The ETF's market share is relatively small compared to larger, passively managed MLP ETFs.

Total Net Assets (AUM): 24151035

Key Competitors

• Alerian MLP ETF (AMLP)
• Global X MLP ETF (MLPA)
• First Trust North American Energy Infrastructure Fund (EMLP)

Competitive Landscape

The MLP ETF market is competitive, dominated by passively managed ETFs like AMLP. AMZA differentiates itself through active management and options strategies but faces challenges in consistently outperforming the index due to high fees and complexity. AMLP benefits from its large scale and lower expense ratio, while MLPA and EMLP offer exposure with different weighting methodologies. AMZA's active strategy may lead to higher volatility compared to passively managed competitors.

Historical Performance: Historical performance has been volatile and, over longer periods, has generally underperformed passively managed MLP ETFs. Past performance is not indicative of future results.

Benchmark Comparison: AMZA's performance has often lagged its benchmark index (Alerian MLP Index) due to its high expense ratio and active management strategy.

Expense Ratio: 0.0905

Average Trading Volume

The ETF has an average trading volume that fluctuates depending on market conditions, but is generally moderate to low, which can impact trade execution costs.

Bid-Ask Spread

The bid-ask spread can be relatively wide, particularly during periods of market volatility, reflecting the ETF's lower liquidity and complexity.

Market Environment Factors

MLP performance is closely tied to energy prices, interest rates, and regulatory changes in the energy sector. Changes in these factors can significantly impact the ETF's returns.

Growth Trajectory

AMZA's growth trajectory is dependent on the success of its active management and options strategies, as well as the overall performance of the MLP sector. Significant strategic changes have been implemented to address issues that occurred since its inception.

Competitive Edge

AMZA attempts to distinguish itself with its active management approach, which seeks to identify undervalued MLPs and enhance income through options strategies. The use of a covered call strategy aims to generate additional income, but also caps upside potential. However, this active strategy has not consistently delivered superior risk-adjusted returns compared to passively managed competitors and the high expense ratio is a notable disadvantage. Its smaller size and lower liquidity may also limit its appeal to larger institutional investors.

Volatility

AMZA exhibits high volatility due to its leveraged strategy and focus on the energy sector. It is more volatile than passively managed MLP ETFs.

Market Risk

The ETF is exposed to market risk associated with the energy sector, interest rate risk, regulatory risk specific to MLPs, and options risk associated with its covered call strategy.

Ideal Investor Profile

AMZA is suitable for sophisticated investors with a high-risk tolerance who are seeking high current income from MLPs and understand the complexities and risks associated with active management, leverage, and options strategies.

Market Risk

This ETF is best suited for active traders who understand options strategies and are comfortable with high volatility. It is generally not suitable for long-term, passive investors.

The InfraCap MLP ETF (AMZA) is an actively managed fund focused on high-yielding Master Limited Partnerships (MLPs) and other energy infrastructure companies. It utilizes options strategies in an attempt to enhance income, but carries higher risks and expenses compared to passive MLP ETFs. Its performance has been volatile and often lags its benchmark. AMZA is suitable only for sophisticated investors with a high-risk tolerance seeking income and comfortable with active management and options strategies. Due to past distribution cuts and performance, investors should carefully consider the risks before investing in AMZA.

Data Sources:

• ETF.com
• Morningstar
• Company Fact Sheet
• YCharts
• SEC Filings

Disclaimers:

The data provided is for informational purposes only and should not be considered financial advice. Past performance is not indicative of future results. Consult with a qualified financial advisor before making any investment decisions.