AMZA: A Buy Despite Volatility and Sector Headwinds

In the face of persistent volatility and sector-specific headwinds, the InfraCap MLP ETF (AMZA) continues to present a compelling case for income-focused investors. Despite challenges such as oil price fluctuations and operational uncertainties within the energy midstream sector, AMZA's valuation metrics and high distribution yield position it as a resilient option. This article examines why AMZA remains a "Buy" despite these obstacles, focusing on its valuation resilience and income potential.

Valuation Resilience in a Challenged Sector

AMZA's valuation metrics highlight its attractiveness. As of late 2025, the ETF trades at a price-to-earnings (P/E) ratio of 15.993 and a price-to-book (P/B) ratio of 2.785, according to a comparison analysis with the Alerian MLP ETF (AMLP). These figures suggest that AMZA is priced reasonably relative to its book value and earnings, particularly when compared to the broader energy MLP sector. The sector, as represented by AMLP, has a forward enterprise value to EBITDA multiple of 8.68x, slightly below its three-year average of 8.77x. This indicates that midstream MLPs, in general, are trading at a discount, making AMZA's active management and focus on high-yield assets even more appealing.

Moreover, AMZA's net asset value (NAV) of $40.2267 as of January 9, 2026, with a closing price of $40.44, reflects a slight premium. This premium suggests investor confidence in the fund's ability to navigate sector headwinds, despite macroeconomic uncertainties such as oil price volatility and weak natural gas prices. Analysts note that midstream MLPs remain relatively inexpensive even after sector gains earlier in 2025, reinforcing AMZA's valuation appeal.

Income Potential and Strategic Management

AMZA's income potential is another key strength. The fund has maintained a consistent distribution of $0.29 per share monthly since at least October 2025, offering a robust yield of 8%. This outpaces the sector's average yield, which stood at 7.5% by the end of 2025. The fund's active management strategy, which includes the use of covered-call options and modest leverage (typically 20–30%), further enhances income generation. However, investors must weigh this against AMZA's relatively high expense ratio of 2.75%, compared to AMLP's 0.85%, which could erode long-term returns.

The fund's strategic use of leverage and options strategies has historically delivered strong performance. Over the five-year period ending July 22, 2025, AMZA achieved a cumulative total return of 285%. This success is attributed to its active security selection, leveraging, and options strategies, which aim to enhance returns while maintaining exposure to high-yield MLPs according to fund analysis. Analysts note that while these strategies can amplify losses during downturns, they have proven effective in capturing gains during favorable market conditions.

Addressing Risks and Sector Headwinds

Despite its strengths, AMZA operates in a sector fraught with challenges. Oil price volatility, weak natural gas prices, and company-specific issues-such as Hess Midstream's revised 2025 guidance- pose risks to distribution sustainability. Additionally, the fund's non-diversified structure and concentration in the energy sector increase vulnerability to market downturns. However, long-term fundamentals remain intact, with rising LNG demand and data center-driven power needs providing tailwinds for midstream infrastructure. Analysts remain cautiously optimistic, noting that MLPs continue to trade at attractive valuations, with AMZA's forward multiples well below historical averages.

Conclusion

In conclusion, while the energy MLP sector faces headwinds, AMZA's valuation resilience, high distribution yield, and strategic management position it as a compelling buy for income-focused investors. The fund's ability to navigate macroeconomic challenges and leverage long-term sector tailwinds underscores its potential to deliver sustained returns, despite the risks inherent in its active management and expense structure.