TPZ: Another Winner

The Tortoise Power & Energy Infrastructure Fund (TPZ) is an interesting animal. It is majority energy and pipeline bonds (and investment-grade at that) and the rest MLPs. However, because it sits in the MLP sector according to CEFConnect, it has tended to trade like an MLP with investors not really differentiating between it and the sector. This is a shame because the fund has much lower volatility than the sector – its NAV drawdown was (only!) 59% versus 80% for the sector this year.

And because of the fund’s debt profile it had an unimpressive distribution rate which drove its discount wider of the sector average. When we added the fund to our Tactical Ideas tab its discount was trading a few percentage points wider of the average.

Another interesting point was the fund’s repurchase program which could support the discount going forward.

Long story short, TPZ discount outperformed the sector and now trades tighter to the average, delivering a nice dose of alpha within a couple of months.

Thanks for reading.

Check out the rest of our daily market commentary, as well as our Income Portfolios and interactive Investor Tools at Systematic Income.

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