Under the Hood of ENFR | ETF Trends

The Alerian Energy Infrastructure ETF (ENFR) offers investors a high dividend yield and strong returns.

ENFR provides exposure to the AMEI Index, a composite of North American midstream energy infrastructure companies, including corporations and MLPs, engaged in the pipeline transportation, storage, and processing of energy commodities, according to SS&C ALPS Advisors.

ENFR has returned 10.25% over a one-month period, 22.87% over a three-month period, and 40.68% over a one-year period, according to ETF Database.

ENFR combines MLP exposure with MLP affiliates and other energy infrastructure companies. For RIC compliance, limited partnership units are allocated a fixed 25% of the portfolio, according to ETF Database.

To be eligible for inclusion in the underlying index, companies must have their principal office in the U.S. or Canada and earn the majority of their cash flow from qualifying midstream activities, such as gathering and processing, liquefaction, pipeline transportation, rail terminaling, and storage, according to ETF Database.

Additionally, companies must meet minimum liquidity requirements for a certain period to be eligible for inclusion in the underlying index, according to ETF Database.

Investors choose to allocate assets to midstream energy companies with ENFR for various reasons.

For one, midstream companies transport, process, and store hydrocarbons, a crucial role that generates predictable fee-based revenue, according to ALPS.

Quarterly dividends driven by fee-based revenues, without fund-level corporate taxes, offer total return potential, according to ALPS.

The fund maintains a sizable advantage compared to segment peers. Its annual dividend yield is 7.43%, compared to the FactSet Segment average of 2.87%, while still maintaining a much lower cost than category peers — charging just 35 basis points compared to the 76 basis point category average, according to ETF Database.

ENFR also offers exposure to long-lived real assets that generate inflation-protected cash flows, according to ALPS.

The fund has $98 million in assets under management.

For more news, information, and strategy, visit the Energy Infrastructure Channel.