The midstream energy arena, which includes master limited partnerships (MLPs), has long lured income-hungry investors. A new ETF amplifies that proposition. The MLP & Energy Infrastructure High Income ETF (MLPI) debuted last December. It’s generating buzz, helped by the White House’s rhetoric on bolstering American energy independence, which is viewed as a potential boon for MLPs. More recently, the war in Iran pushed energy prices and stocks higher, putting more eyeballs on MLPI.
Indeed, this income-laden energy infrastructure ETF is off to an impressive start. Its $497.6 million in assets under management as of April 10 certainly highlights that point. That’s also the byproduct of fast growth in the options-based ETF space – growth led in large by NEOS.
“And when I think about the growth of the options based ETF category overall, as I mentioned, this has been a really good spot to be,” said Troy Cates of NEOS on a recent episode of the ETF Prime podcast. “You clearly saw that as an opportunity going back several years.”
MLPI Meeting Income Needs
As is the case with the broader NEOS lineup, MLPI takes a familiar investment concept — be it equity indexes, gold, bonds, or even cryptocurrency — and ratchets up the income dial. Yes, MLPI is benefiting from goings on specific to the energy patch. More importantly, however, the new ETF may be durable for the long-term because investors are altering their approaches to income.
“I think the search for income is really important. I think, you know, people look at their most income, people look at their fixed income portfolios,” said Cates on ETF Prime. “And I feel like that hasn’t been cutting it, as much as it should be for most people. And we saw that in 22 when everything sold off.”
Importantly, MLPI delivers on the income objective as highlighted by a 30-day SEC yield of 3.30%. However, it’s also delivering at the performance level. That confirms why advisors are taking close looks at this rookie ETF.
“Performance has been great, obviously, because of the geopolitical environment right now,” observed Cates. “Again, talking to advisors, talking to investors that were looking for…more income and [to]have a larger distribution…for their shareholders from the MLP and energy infrastructure space.”
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