Instead, EMLP is an energy equity ETF with a strong infrastructure tilt. Its portfolio is a mash-up of pipelines, utilities and Canadian income trusts; just 25% is in MLPs.
That makes comparing EMLP to index MLP funds a bit like comparing Apple Jacks to apples. But neither is it fair to compare EMLP to other energy equity ETFs, since the fund's managers specifically pick noncyclical securities for their relative immunity to oil and gas prices.
However you classify EMLP, it’s done remarkably well over its lifetime. The ETF has outperformed our MLP benchmark, the Alerian MLP Index, by almost 13% over the past three years. It's also outpaced all other energy equity ETFs over the past five years. Says Issakainen: "Knowing which securities to avoid and which to buy is key."
Compare that with AMZA, which offers much purer exposure to MLPs. The fund's managers handpick 25-50 MLPs, selecting for undervalued companies that post strong quarterly cash distributions. (That's important, because AMZA's C-corp structure means gains are taxed, but distributions are tax-deferred.)
With a scant 2.7% improvement over the Alerian MLP Index, AMZA hasn't captured the same outperformance as EMLP. But AMZA offers something EMLP doesn't: sky-high yields. As of late June 2017, AMZA yielded 22%, making it the highest-yielding ETF in any asset class, active or not.
Still, one of these two ETFs hews closer to the MLP sector than the other—and it's also the fund posting more modest gains.
ARK-ing To The Stratosphere
A similar oddity occurs in ARK Invest's suite of active ETFs. These "disruptive innovation" funds eschew the idea of sectors entirely; instead, it seeks exposure to transformative technology platforms. Think robotics, for example, or cloud computing.
"We believe traditional sector silos are rapidly becoming outdated," said Tom Staudt, ARK's director of product development. "The economy simply can't be modeled by sectors anymore."
Three ARK ETFs zero in on a different technology platform, while a fourth, the ARK Innovation ETF (ARKK), compiles the three strategies: