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An Outperformer In Energy Infrastructure

Those that seek income from their portfolios usually face a dilemma. They are by definition normally at the point where they are looking to protect their capital, so are risk-averse, but the interest and other payments that make up securities income are essentially a reward for risk. The trick is in balancing that risk and reward and that can be done in one of two ways.

The first is to moderate both sides by investing entirely in middle income producing, moderately risky instruments. The second is to average within your holdings, owning some high-yielding but risky things, and some with lower yield but a greater degree of safety. Those that take the second approach may want to consider the InfraCap MLP ETF (AMZA) as an element of the risky but high-yielding part of their portfolio.

AMZA is a unique animal. It is an actively managed ETF that employs some leverage. Both of those things increase costs, resulting in an expense ratio of 2.4%. That would be high for a traditional mutual fund, but for an ETF it is even more so. As if that isn’t enough to put you off, the one-year chart looks like this…

Before you conclude that I have lost my mind though, consider this. That chart shows a 13.2% 1-year loss, but during that time distributions have totaled over 15% and AMZA has outperformed its peers throughout its existence. Over the last three months, for example, the fund has returned 23.6% versus a category average of -1.4%.

Still,…

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