NTG - SRV: Great Midstream Energy Fund With A High Yield But Extremely Expensive

2024-05-13 05:27:40 ET

Summary

• The NXG Cushing Midstream Energy Fund offers income-seeking investors exposure to midstream partnerships, which have outperformed the S&P 500 Index over the past three years.
• The fund delivers a high level of income, boasting a 12.35% yield, higher than most of its peers.
• The fund's share price has increased by 21.55% since November 2023, outperforming both the Alerian MLP Index and the large-cap stock index.
• The fund has outperformed many of its peers over the past three years, with only ClearBridge's funds delivering a better showing. All of the ClearBridge funds have lower yields.
• The fund's current valuation is incredibly expensive, as it boasts a huge premium on net asset value.

The NXG Cushing Midstream Energy Fund ( SRV ) is a closed-end fund that income-seeking investors can employ as a method of accomplishing their goals of earning a high level of income from the assets that are present in their portfolios. The fund does this by investing in a portfolio of midstream partnerships, which is certainly very different from debt-focused closed-end funds that tend to dominate the portfolios of many investors who seek portfolio income. This is nice because the equities that are held by a fund like this provide exposure to much greater upside potential than fixed-income securities. In fact, midstream partnerships have outperformed the S&P 500 Index ( SP500 ) over the past three years. We can see this by looking at the price performance of the Alerian MLP ETF ( AMLP ) compared to the large-cap index over the past three years:

The NXG Cushing Midstream Energy Fund invests in securities similar to the ones that are held by the Alerian MLP ETF, so we can see the potential for upside very quickly....

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