Best Performing Active ETFs

January 19, 2017

Actively managed ETFs seldom get a much love in a world dominated by passive ETF strategies. But a few of these active funds have staged impressive performances in the past 12 months that might have gone largely unnoticed by mainstream investors.

Here’s a quick look at the best-performing active ETFs in the past one year, each with gains exceeding 40%. For reference, consider that the SPDR S&P 500 (SPY) shelled out some 23% in gains in the same period.

InfraCap MLP ETF (AMZA) – up 68% in the past 12 months

AMZA invests in midstream MLPs—the master limited partnerships that collect, process, store and transport energy.

The fund is an actively managed ETF in a segment populated primarily by passive strategies. And by design, it seeks to generate returns through capital appreciation, current income and growth in income, according to the fund’s manager, Infrastructure Capital Advisors.

AMZA is structured as a C-corp, as most MLP strategies are, to circumvent the rule that open-ended funds can't hold more than 25% of their portfolios in MLPs, according to ETF.com Analytics.

The portfolio is not market-cap-weighted like most MLP strategies. Instead, securities are weighted based on estimated total return and company fundamentals. Its top two holdings combined, Energy Transfer Partners and Williams Partners, represent almost 30% of the basket.

By comparison, the largest MLP strategy in the space, the $3.8 billion J.P. Morgan Alerian MLP Index ETN (AMJ), is passive and market-cap-weighted. In the past 12 months, the relative performance difference between these two MLP strategies is a staggering 25 percentage points, as the chart below shows.

AMZA has an expense ratio of 1.11%, or $111 per $10,000 invested, and $200 million in AUM. Distribution yield on this fund was last reported at 19.04%. 

 

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