WMB - TYG: Performance Laggard With No Near-Term Catalyst

2024-03-24 03:22:40 ET

Summary

• Tortoise Energy Infrastructure Corp. is a closed-end fund that invests in midstream and renewable energy companies to provide high current income.
• The fund has underperformed the S&P 500 Index and Alerian MLP Index since our last discussion, but its distributions have helped offset the underperformance.
• The fund's focus on renewable energy has contributed to its recent underperformance, as the sector has faced setbacks in an inflationary environment.
• The fund appears capable of sustaining its distributions and trades at an enormous discount to net asset value.
• There is no upside or downside catalyst here and investors may be better off with a standard energy infrastructure fund.

Tortoise Energy Infrastructure Corp. ( TYG ) is a closed-end fund that invests in midstream and, to a lesser extent, renewable energy companies with the goal of providing its investors with a high level of current income from these assets. This fund helps investors resolve one of the biggest challenges that they face when investing in some of these companies, as energy infrastructure companies that are structured as master limited partnerships are quite difficult to include in a retirement or similar account without facing potential consequences at tax time. Admittedly, though, this challenge is not as big of a deal as it once was due to the fact that many master limited partnerships have restructured themselves as corporations in recent years. However, it does still provide an easy way to add a number of infrastructure companies to your portfolio in one easy trade so it might still be worth considering for that reason.

As regular readers may remember, we previously discussed Tortoise Energy Infrastructure Corp. in late December of 2023. The market has overall been rather strong since that time, including for energy infrastructure companies. This is something of a departure from the trend that we have seen over the past decade in which midstream and other traditional energy companies did not really participate in market rallies. As a result, we might expect that the fund has performed reasonably well since our last discussion. However, this is not the case as shares of Tortoise Energy Infrastructure Corp. have only risen by 3.10% since the date that the previous article was published:

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