InfraCap MLP ETF: The Distribution Is Actually Being Covered

1. InfraCap MLP ETF: The Distribution Is Actually Being Covered A strong bear case has been made against the coverage of AMZA's distribution. AMZA's use of leverage, the constitution of AMZA's holdings, and the recent poor unit price performance of MLPs relative to oil prices provides clarity. Short position and options income losses should not be ignored. However, they won't hinder the long-term sustainability of the distribution if MLPs' distributions continue increasing and their historical correlation to oil prices resumes. If you are bearish on MLPs, why invest in AMZA? After reading a well-written counter-rebuttal of my article InfraCap MLP ETF: The Distribution Is Actually Being Covered, I stick by my conviction that the fund's current distribution policy is covered by distributable cash flow and is also sustainable. In this article, I will attempt to provide investors with my perspective on the thought- provoking points and questions the rebuttal raised concerning my initial article. For more information visit: https://www.infracapfunds.com/ Background In my recent article on InfraCap MLP ETF (AMZA), I sought to clarify a few points for investors regarding distribution coverage and total returns that seemed to be unclear in a fellow contributor's insightful article. My point was simply that AMZA's stated primary focus (and therefore investment strategy) is on income, not total return, and that management based the distribution coverage off of distributable cash flow from dividends and options premiums, not net profits, and was therefore apparently successfully covering (by its stated definition) its distribution based on the data in the semiannual report. While the steep losses from shorting ate into the fund's NAV, they were clearly due to a disconnect in price performance between commodities and MLP units during the six-month period in question and therefore, were not necessarily indicative of an unsustainable course for the fund.