AMZA delivers high income from midstream energy infrastructure companies by combining MLP exposure with an options overlay strategy. The fund targets yields well above what you'd get from simply owning pipelines, making it a play for income investors willing to stomach energy sector volatility.
How It Works
The fund holds master limited partnerships (MLPs) that own and operate energy pipelines, storage facilities, and processing plants. Management writes covered calls on the portfolio to juice the yield, collecting option premiums on top of MLP distributions. This options overlay can generate 10%+ yields but caps upside when energy rallies hard.
Key Features
- Yields 6.5%+ from combining MLP distributions with option premium income
- Actively managed MLP selection focuses on fee-based midstream assets over commodity-sensitive names
- Options overlay provides income cushion when MLP prices decline but limits participation in rallies
Risks
- MLP tax complexity creates K-1 headaches and potential unrelated business taxable income in IRAs
- Covered call strategy caps gains during energy rallies — you'll miss the big moves up
- Midstream MLPs still correlate with oil prices despite fee-based models, expect 30-40% drawdowns in energy crashes
Who Should Own This
Best for yield-hungry investors who understand MLPs and don't mind tax complexity for an extra 200-300 basis points of income. Works in taxable accounts for those seeking energy infrastructure exposure with downside income protection. Skip this if you want pure energy upside or can't handle K-1s.