By JE Insights, Benzinga

ZINGER KEY POINTS:

• Midstream energy MLPs often entice investors with high yields but also shun them with tax-related complexities.

• The InfraCap MLP ETF (AMZA) seeks high yields without the headaches, an intriguing alternative for midstream investors.

DETROIT, MICHIGAN - October 13, 2025 (NEWMEDIAWIRE) - It’s not uncommon to see publicly traded midstream energy giants offer investors attractive yields of 7% or more, enticing investors across the risk-reward spectrum. What’s more, with the U.S. Federal Reserve (Fed) cutting its benchmark interest rate by 25 basis points last month - and hinting that more cuts could follow - the coming environment would seem to potentially favor an approach targeting passive income.

Still, the high yields may represent a stumbling block for investors unaccustomed to the structure of master limited partnerships (MLPs). A business structure that combines the tax advantages of partnerships with the liquidity of publicly traded securities, MLPs allow sophisticated investors to treat the underlying distributions mostly as return of capital. As such, this typically reduces the cost basis in MLP units.

While such transactions can be advantageous to certain taxpayers, they entail complexities. In particular, investors must file a Schedule K-1, which details the partnership’s income, deductions and credits each unitholder personally owes taxes on. It’s an incredibly detailed and complex form, adding to an already stressful taxation protocol.

Interestingly, an MLP must generate 90% of its revenue from natural resources. Subsequently, investors dead-set on targeting the fundamental relevancies of the energy and commodities space often found that they couldn’t avoid the MLP umbrella - until financial services provider Infrastructure Capital Advisors delivered a viable solution.

With the launch of the InfraCap MLP ETF (AMZA) in 2014, the actively managed exchange-traded fund brought to the table an approach designed to be the best of both worlds: higher yields of leading energy and resource-focused MLPs with the simplified tax structure of commonly traded securities. Such an approach helps to broaden the appeal of these specialized entities, thereby putting a spotlight on AMZA.

Fundamental Winds Helping The Case For The MLP ETF

At a topical level, the main driver for AMZA is interest rates. Initially, the shock of the unprecedented COVID-19 crisis forced the Fed to implement an accommodative monetary policy. As such, the benchmark interest rate hit rock-bottom lows. However, the resultant inflation forced policymakers to take action again, this time with a more aggressive focus.

With borrowing costs moving northward, savers rejoiced - but the matter also caused political friction. Since taking office for the second time, the current administration has consistently applied pressure on Fed Chair Jerome Powell to lower the benchmark interest rate. Under classic economic theory, reduced borrowing costs should encourage higher spending and greater business investments, all activities that should bolster the gross domestic product (GDP).

Now, with the Fed apparently moving monetary policy back toward lower interest rates, the so-called risk-free yield tied to U.S. Treasuries should decline, making income-seeking investors reconsider their options. One approach has been to target the resources sector, especially the component within the value chain known as midstream.

Midstream operators represent the connecting link between upstream (exploration and production) and downstream (refining and retail). This segment involves pipelines, storage and processing, business areas that tend to be less sensitive to commodity price swings because they earn fees on volume moved, not on the oil or gas prices themselves.

That may be a huge fundamental advantage, because of the current geopolitical environment. With Russia’s invasion of Ukraine showing no signs of cessation, the military conflict has disrupted Russian energy supply chains, raising concerns about broader stability. In addition, the Trump administration suddenly pivoted on its Ukraine policy, suggesting that more disruptions could be possible.

Such an environment could certainly favor MLPs, were it not for their complex tax structures. But with the availability of AMZA, interested investors have a viable avenue to consider.

Multiple Relevancies Augment The Case For AMZA 

In effect, the core narrative helping to drive the case for AMZA is that retail investors have options. Ordinarily, energy-focused MLPs offer very attractive yields, along with maddening tax complexities. With this specialized financial vehicle from Infrastructure Capital Advisors, market participants can skip the K-1s while potentially enjoying elevated passive income.

That may be one key relevancy that has many investors researching the power of AMZA. Another intriguing element is the fund’s active management. Led by Jay D. Hatfield, Infrastructure Capital Advisor’s founder, CEO and portfolio manager, AMZA investors could benefit from his nearly three decades of experience in the securities and investment industries. Throughout his career, Hatfield has earned a broad perspective on the U.S. financial markets, covering areas such as investment banking, real estate, and energy infrastructure.

Moreover, Hatfield serves as the portfolio manager of other financial vehicles under the Infrastructure Capital Advisors umbrella, including the popular products InfraCap REIT Preferred ETF (PFFR) and Virtus InfraCap U.S. Preferred Stock ETF (PFFA).

These specialized ETFs leverage the active oversight of experienced research, along with a strong acumen for advanced trading tactics, to potentially deliver asymmetrically elevated returns beyond what would normally be expected via passive investments.

Much of what makes AMZA attractive for risk-tolerant investors is the fund’s strategic focus, which in large part involves enhanced exposure. Utilizing a modest amount of leverage (typically around 20% to 30%), Hatfield and his team seek to enhance the MLP-focused ETF’s beta. This approach helps to accentuate the vehicle’s risk-reward profile, enabling the potential for greater total upside.

In addition, option writing (selling) strategies are deployed to help further bolster passive income for investors. This is where experienced active management comes into play, as all credit-based strategies feature tail risk: the ever-rising threat of an obligatory payment as the underwritten event becomes realized to the extreme ends of the distribution.

Of course, the other side of tail risk involves calling the trade correctly, which can lead to potentially higher returns. With the Fed shifting toward lower interest rates, passive income will likely see an uptick in interest, possibly placing AMZA in a positive light.

Finally, with the fund structured for monthly distributions, AMZA can align with a variety of financial strategies.

A Streamlined Approach To Yields

Ultimately, the InfraCap MLP ETF offers something rare in today’s market - potentially high yields without high maintenance. Investors can access the strong cash flow characteristics of midstream energy infrastructure while avoiding the complexity of partnership taxation and K-1 filings.

For income seekers who want exposure to energy’s critical backbone without the paperwork headache, AMZA stands out as a practical, actively managed alternative. With monthly distributions, experienced leadership and leverage designed to magnify returns, it’s an ETF built for anyone looking for yield, convenience, and energy exposure in one trade.

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This post contains sponsored content. This content is for informational purposes only and is not intended to be investing advice. 

This content was originally published on Benzinga. Read further disclosures here.

Please consider the investment objectives, risks, charges and expenses of the Fund carefully before investing. The prospectus contains this and other information about the Fund. Contact us at 1-888-383-0553 or visit www.virtus.com for a copy of the Fund's prospectus. Read the prospectus carefully before you invest or send money.

Exchange-Traded Funds (ETF): The value of an ETF may be more volatile than the underlying portfolio of securities it is designed to track. The costs to the portfolio of owning shares of an ETF may exceed the cost of investing directly in the underlying securities. Master Limited Partnerships: Investments in MLPs may be adversely impacted by interest rates, tax law changes, regulation, or factors affecting underlying assets. Energy Industry Concentration: The portfolio’s investments are concentrated in the energy industry and presents greater risks than if the portfolio was broadly diversified over numerous sectors of the economy. Leverage: When the Fund leverages its portfolio, the Fund may be less liquid and/or may liquidate positions at an unfavorable time, and the value of the Fund’s shares will be more volatile and sensitive to market movements. Options: Selling call options may limit the opportunity to profit from the increase in price of the underlying asset. Selling put options risks loss if the option is exercised while the price of the underlying asset is rising.  Buying options risks loss of the premium paid for those options. Market Price/NAV: At the time of purchase and/or sale, an investor’s shares may have a market price that is above or below the fund’s NAV, which may increase the investor’s risk of loss. Market Volatility: The value of the securities in the portfolio may go up or down in response to the prospects of individual companies and/or general economic conditions. Local, regional, or global events such as war or military conflict, terrorism, pandemic, or recession could impact the portfolio, including hampering the ability of the portfolio’s manager(s) to invest its assets as intended. Prospectus: For additional information on risks, please see the fund’s prospectus. PFFA, PFFR, and AMZA are distributed by VP Distributors, LLC, member FINRA and subsidiary of Virtus Investment Partners, Inc.

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