Why I Like JMLP More Than AMZA

Summary

• The MLP sector remains near its lows thanks to weak oil pricing and macro-economic fears.
• Given that the K-1 tax form drives many investors away from MLPs, ETFs and CEFs are a popular way to invest in the sector.
• AMZA is one of the most popular MLP funds due to its lucrative monthly distribution.
• However, management has a track record of significant underperformance.
• For investors reaching for even greater yield in an already high-yield space, I recommend looking at JMLP.
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With the end of 2019 quickly approaching, investors can begin looking into the benefits of tax loss harvesting and potentially making adjustments to their portfolio that will help them write off some taxes that may be due at year end by selling some of their losing investments. This is especially advisable when they can recycle those funds into another similar investment that arguably has an even more favorable forward-looking investing outlook.

We believe that we have found one of these opportunities, and therefore think that now is a great time to sell shares in InfraCap MLP ETF (AMZA) in favor of the Nuveen All Cap Energy MLP Opportunities CEF (JMLP), which is currently trading near the greatest discount to NAV in its history.

Why Sell AMZA?

AMZA's management claims that it either nearly or completely covers this distribution through options premiums and leveraged exposure to high-yielding MLPs. Its investment thesis rest on the premise that MLPs - due to their strong yield and growth profile - are one of the most opportunistic sectors today. AMZA seeks to provide investors access to the sector without having to deal with K-1s and - while its past record is checkered - management is trying to correct the mistakes of the past, offering investors a simpler and more focused fund that seeks to employ leverage and covered calls intelligently to maximize cash flow while also reducing downside risk and retaining as much upside potential as possible. In effect, management is seeking maximum total returns by seeking to time the market and gain the best of all worlds.

The fund has already experienced several steep distribution cuts and is likely to do so again in the near future. However, if MLPs are truly ready to resume long-term distribution growth future cuts are likely to be minimal. For investors

Analyst’s Disclosure:I am/we are long ET. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I will likely initiate a position in JMLP in the near future.