The Case for NML as a Strategic Play in the Global LNG Growth Story

The global energy landscape is undergoing a seismic shift, driven by the dual forces of decarbonization and the urgent need for reliable energy infrastructure. In this evolving environment, the Neuberger Berman Energy Infrastructure and Income Fund (NML) emerges as a compelling vehicle for investors seeking exposure to the liquefied natural gas (LNG) growth story while navigating the complexities of the energy transition. By analyzing NML's investment strategy, leverage, and alignment with sector tailwinds, it becomes evident that the fund is uniquely positioned to capitalize on the intersection of traditional energy infrastructure and the emerging clean energy paradigm.

A Fund Built for Infrastructure and Income

NML's core mandate is to deliver total return with an emphasis on cash distributions, primarily through investments in energy infrastructure companies. Under normal market conditions, the fund allocates at least 80% of its assets to equity or fixed-income securities of such entities, with a current effective leverage of 23.08%. This leverage, combined with its focus on high-yield midstream assets, amplifies its potential to generate attractive returns in a sector characterized by stable cash flows. As of August 28, 2025, NML offered a monthly distribution rate of 8.01%, translating to a yield of $0.0584 per share. Such metrics underscore its appeal to income-oriented investors, particularly in a low-interest-rate environment where traditional fixed-income alternatives struggle to compete.

Sector Tailwinds: LNG as a Bridge Fuel

The global LNG market is expanding rapidly, driven by surging demand in Asia and Europe as nations seek to replace coal and oil with cleaner-burning alternatives. While NML's specific portfolio holdings in LNG infrastructure companies for Q3 2025 remain undisclosed, its focus on midstream energy infrastructure-encompassing pipelines, storage, and terminals-positions it to benefit from the sector's growth. Master limited partnerships and limited liability companies, which constitute a significant portion of NML's investments, are particularly well-suited to fund the capital-intensive projects required to scale LNG export capacity.

This alignment is critical given the energy transition's current phase. According to a report by BloombergNEF, global investment in the energy transition reached $2.1 trillion in 2024, with electrified transport and renewables dominating the headlines. However, natural gas remains a transitional necessity, especially as hydrogen and carbon capture technologies grapple with scalability and cost barriers. For instance, China's energy transition investment hit $818 billion in 2024, yet its reliance on coal necessitates a continued role for LNG as a lower-emission alternative. NML's exposure to midstream infrastructure, which underpins LNG development, allows it to participate in this duality-supporting both immediate energy needs and long-term decarbonization goals.

Navigating the Energy Transition

Critics of fossil fuel investments often overlook the pragmatic realities of the energy transition. While the ultimate goal is a net-zero economy, the path there requires a bridge fuel, and LNG is filling that role. NML's portfolio managers, Douglas Rachlin and Paolo Frattaroli, have demonstrated a nuanced approach to this challenge. By prioritizing infrastructure companies that are adapting to regulatory and technological shifts-such as those integrating carbon capture or transitioning to hydrogen-ready facilities-the fund mitigates long-term risks while maintaining short-term profitability.

Moreover, NML's leverage strategy enhances its ability to weather volatility. With a share price of $8.75 and a net asset value of $9.56 as of August 2025, the fund trades at a discount to NAV, offering a margin of safety for investors. This discount, coupled with its disciplined focus on high-yield midstream assets, creates a buffer against the sector's cyclical downturns. In an era where energy markets are increasingly influenced by geopolitical tensions and regulatory uncertainty, such resilience is invaluable.

Risks and Considerations

No investment is without risk. NML's exposure to energy infrastructure makes it vulnerable to commodity price swings and regulatory changes, particularly in the U.S. and Europe. Additionally, the fund's leverage, while a tool for amplifying returns, can exacerbate losses during downturns. Investors must also contend with the possibility that the energy transition could accelerate faster than anticipated, reducing the long-term viability of LNG infrastructure. However, given the current pace of technological adoption and the geopolitical imperative for energy security, these risks appear manageable for a fund with NML's strategic focus.

Conclusion

The Neuberger Berman Energy Infrastructure and Income Fund represents a strategic play for investors seeking to align with the global LNG growth story while participating in the energy transition. Its disciplined investment approach, leverage, and focus on midstream infrastructure position it to benefit from both the immediate demand for cleaner energy and the long-term shift toward sustainability. As the world navigates this complex transition, NML offers a rare combination of income generation, sector-specific exposure, and adaptability-a testament to the enduring relevance of energy infrastructure in a rapidly changing world.