Unlocking High Yield in a Low-Yield Market: Evaluating AMZA as a Strategic Income Solution

In an era where traditional fixed-income assets struggle to compete with inflation and low yields, investors are increasingly turning to alternative income strategies. Master Limited Partnership (MLP) ETFs have long been a go-to solution for those seeking high dividends, and the InfraCap MLP ETF (AMZA) stands out with its 8.56% yield as of July 2025. But how does AMZA stack up in today's market, and is it a viable addition to an income portfolio? Let's dissect the fund's structure, risks, and role in a low-yield environment.

AMZA: A High-Yield Powerhouse with Strategic Leverage

AMZA, or the InfraCap MLP ETF, is an actively managed fund focused on midstream MLPs—energy infrastructure companies that transport, store, and process oil and natural gas. Its current yield of 8.56% dwarfs the 4.44% yield on the 10-year Treasury, making it a compelling option for income-focused investors. The fund's strategy combines security-level fundamental analysis with modest leverage (20–30%) to amplify MLP beta and options strategies to enhance returns. This active approach allows AMZA to rotate holdings based on market conditions, reducing single-entity risk while maintaining a diversified portfolio.

The fund's top holdings, including Energy Transfer LP (16.12%), MPLX LP (14.80%), and Enterprise Products Partners (14.04%), are all large-cap MLPs with stable cash flows from long-term contracts. These companies form the backbone of the U.S. energy infrastructure, offering resilience even in volatile markets. However, AMZA's concentration in midstream MLPs also exposes it to sector-specific risks, such as regulatory changes or shifts in energy demand.

Comparing AMZA to the MLP ETF Field

While AMZA's yield is among the highest in the MLP ETF space, it comes with a 2.75% expense ratio—well above the category average of 0.79%. Competitors like the Global X MLP ETF (MLPA, 0.45% expense) and Alerian MLP ETF (AMLP, 0.87%) offer lower costs but yields of 7.5% and 7.74%, respectively. For investors prioritizing yield over cost, AMZA's premium is justified by its active management and leverage, but it's not without trade-offs.

The Tortoise North American Pipeline Fund (TPYP, 4.76% yield, 0.40% expense) and Pacer American Energy Independence ETF (USAI, 5.18%, 0.75%) provide more balanced profiles, blending moderate yields with lower fees. However, AMZA's focus on midstream MLPs and its use of options and leverage make it uniquely positioned to capitalize on energy infrastructure's stable cash flows, a critical advantage in a low-yield market.

Market Context: Navigating a 4.4% Yield World

The U.S. 10-year Treasury yield of 4.44% as of July 2025 reflects a market grappling with inflation expectations and Federal Reserve policy. While the Fed has paused rate cuts, its cautious stance suggests rates will remain elevated for the foreseeable future. This environment pressures traditional income vehicles, making high-yielding MLPs more attractive.

MLPs, however, are not immune to interest rate risk. Their high leverage and reliance on debt financing mean rising rates can compress margins. AMZA's use of leverage (20–30%) amplifies this sensitivity, but its focus on midstream MLPs—companies with long-term contracts and predictable cash flows—mitigates some of this risk. The fund's active management also allows it to adjust exposure based on macroeconomic signals, a flexibility not found in passive MLP ETFs.

Risks and Considerations

1. Volatility and Leverage: AMZA's beta of 2.0 indicates twice the market's volatility. While leverage enhances returns, it also magnifies losses during downturns.
2. Sector Concentration: The fund's heavy tilt toward midstream MLPs exposes it to energy sector risks, including regulatory changes and commodity price swings.
3. Expense Ratio: At 2.75%, AMZA's costs are high. Investors must weigh this against its yield and active management benefits.
4. Tax Complexity: MLPs generate complex tax treatments, including unrelated business income (UBI), which may affect retirement accounts or tax-sensitive investors.

Strategic Role in an Income Portfolio

AMZA is best suited for investors seeking aggressive income in a low-yield market, particularly those with a higher risk tolerance. Its high yield and active management make it a strong complement to lower-yielding ETFs like MLPA or AMLP. However, diversification is key: pairing AMZA with non-energy income assets (e.g., high-yield municipal bonds or REITs) can balance sector risk.

For conservative investors, AMZA should be a smaller allocation within a broader portfolio. Its leverage and volatility require careful monitoring, especially in a rising rate environment. Those prioritizing cost efficiency might opt for lower-fee MLP ETFs but will sacrifice AMZA's yield and tactical advantages.

Conclusion

The AMZA ETF offers a compelling case for high-yield income in a 4.4% world, leveraging its focus on midstream MLPs, active management, and strategic leverage. While its high expense ratio and volatility present challenges, its 8.56% yield and diversified portfolio of energy infrastructure giants position it as a top-tier MLP ETF for income-focused investors. In a market where traditional bonds struggle, AMZA's blend of yield, diversification, and active risk management makes it a strategic tool for those willing to navigate its complexities.