Fund Expert "Steers" Investors to MLPs

07/08/2020 5:00 am EST


Robert Carlson

Editor, Retirement Watch

Timing is everything when looking at your portfolio these days. The returns are very different from one week, and sometimes one day, to the next, suggests fund and ETF expert Bob Carlson, editor of the industry-leading advisory, Retirement Watch.

We need to accept that there will be high volatility. Ignore short-term market noise and focus on longer-term trends.

The latest addition to our retirement model portfolios — Cohen & Steers MLP & Energy Opportunity (MLOAX) — had gained about 25% from May 12 through June 8 before plunging in the June 11 market selloff. It now is up 6.96% for the last four weeks but still is down 31.08% for the year to date. The yield is 8.03%.

MLOAX invests primarily in companies that provide midstream energy services, such as pipelines and storage tanks. Prices of these investments declined sgarply because of the dual catastrophes of the oil price war and the coronavirus pandemic.

Energy prices seem to have hit a bottom, and there’s been a surge in these investments. Even after the surge, they have a lot of room to the upside.

As an actively managed fund, MLOAX can focus on the investments in each sector with the best fundamentals and values. After the oil price collapse, it began focusing on companies likely to withstand a severe downturn, avoiding overleveraged firms and those with weak balance sheets.

It also increased its positions in Canadian companies, because they are more insulated from global price shocks. The fund recently owned 33 positions with almost 74% of its holdings in the 10 largest positions.

Major positions were Enbridge (ENB), Kinder Morgan (KMI), TC Energy (TRP), Enterprise Products Partners (EPD) and Energy Transfer (ET).

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