ETF spotlight on the Alerian Energy Infrastructure ETF (NYSEArca: ENFR), part of an ongoing series.
Assets: $16.95 million
Objective: The Alerian Energy Infrastructure ETF tries to reflect the performance of the Alerian Energy Infrastructure Index, which is comprised of 30 core North American energy infrastructure companies engaged in the transportation, storage and processing of energy commodities.
Holdings: Top holdings include Enbridge (NYSE: ENB) 5.1%, Transcanada (NYSE: TRP) 5.0%, Kinder Morgan (NYSE: KMI) 4.4%, Williams Cos (NYSE: WMB) 4.4% and Plains GP Holdings (NYSE: PAGP) 4.3%.
What You Should Know:
- ALPS Portfolio Solutions sponsors the fund.
- ENFR has a 0.65% expense ratio.
- The ETF has 30 holdings and the top ten components make up 43.0% of the overall portfolio.
- ENFR is down 5.8% over the past month, down 0.1% over the past three months and down 7.4% year-to-date.
- The fund was at a 29.8 on the relative strength index, suggesting that it is trading near oversold territory.
- The ETF comes with a 2.38% 12-month yield.
- Sub-sector weights include MLP affiliates 30%, energy infrastructure MLPs 25%, Canadian energy infrastructure companies 20%, U.S. energy infrastructure companies 15% and Canadian MLP affiliates 10%.
- ENFR acts like a hybrid MLP ETF, which has reduced direct MLP holdings to meet regulatory rules and holds other energy infrastructure stocks through subsidiaries as a way to avoid double taxation in C-corporation MLP ETFs. [How MLP ETFs Work]
- Nevertheless, the ETF still enjoys limited exposure to energy prices as MLPs and other related infrastructure companies act like a toll road for the U.S. energy market.
- The asset also shows relatively low correlation to traditional stocks and bonds.
The Latest News:
- “We’re not expecting those high returns now, [but]we still think that there’s an investment case for owning MLPs,” William Waight, an adviser in Oak Brook, said in the Wall Street Journal.
- “All properly diversified portfolios should include five to ten percent in energy-related Master Limited Partnerships (MLPs),” David DeWitt, President & Portfolio Manager, DeWitt Capital, said, according to ACNNewswire. “Over a 16-year period, MLPs have been the top performing asset class compared to utilities, real estate, the S&P bond municipals, small cap stocks and world indexes. MLPs are ideal for high net worth individuals as yields are high and taxes low.”
- The MLP infrastructure space is expanding on the heels of the U.S. shale oil boom.
- The industry is expected to grow as the country expands its energy infrastructure over the next two decades.
- New infrastructure, like pipelines, storage and fractionation facilities, are need to meet the new supply of oil generated through new hydraulic fracturing techniques.
- While MLPs have exhibited some price volatility with falling oil prices, investors will still enjoy yields and growth in the space.
Alerian Energy Infrastructure ETF
For past stories in this series, visit our ETF Spotlight category.
Max Chen contributed to this article.