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Strategies & Market Trends : CEF and ETF
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From: Julius Wong10/4/2020 8:47:52 AM
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Six pipeline funds offer cheap way to play energy rebound - Barron's


The closed-end funds that focus on oil and gas pipeline companies generally trade at discounts to their net asset values of 20% or more - the widest in the U.S. closed-end fund market, where the average discount is less than 10% - Andrew Bary writes in this weekend's edition of Barron's.

"You're buying the funds at a discount to an asset class that is already discounted," says Rob Thummel, a portfolio manager at Tortoise Energy Infrastructure.

Kayne Anderson Energy Infrastructure (NYSE: KYN), the largest fund in the sector with $690M in net assets, is down 71% YTD and now trades at ~$4.

Other major MLP funds include Tortoise (NYSE: TYG), ClearBridge MLP & Midstream (NYSE: CEM) and First Trust MLP & Energy Income (NYSE: FEI).

"The biggest change in the industry has been a focus on free cash flow and cuts in capital expenditures. These companies can generate massive amounts of cash flow," says Thummel, who likes industry leader Enterprise Products Partners (NYSE: EPD), whose units are down 44% YTD.

At a time of ultra-low rates, MLP closed-end funds "offer an income bonanza and exposure to a depressed and still vital portion of the energy sector," Bary concludes.

seekingalpha.com
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