Today, Tortoise Capital Advisors began the holiday week by merging three closed-end funds into a singular active ETF.
The three closed-end funds that were merged are the Tortoise Power and Energy Infrastructure Fund, Inc. (TPZ), Tortoise Pipeline & Energy Fund, Inc. (TTP), and Tortoise Energy Independence Fund, Inc. (NDP). These three funds have been merged into the Tortoise Power and Energy Infrastructure Fund (TPZ).
“This merger achieved our objective of providing investors with net asset value. In addition, this conversion reflects our commitment to providing innovative solutions tailored to the needs of modern investors,” said Tom Florence, CEO of Tortoise Capital. “By transitioning to an actively managed ETF, we’ve enhanced access and flexibility while preserving the strategy’s legacy of delivering competitive income and exposure to the rapidly evolving energy sector.”
Balancing Equity and Fixed Income Exposure
TPZ looks to offer current income, with a secondary goal of capital appreciation. This fund has a net expense ratio of 0.85%.
Income and capital appreciation for the fund comes from Tortoise Capital’s exposure to power and energy infrastructure companies. The energy exposure can come from both equity and fixed income securities.
Up to 25% of securities for the fund may be invested towards equities tied to master limited partnerships (MLPs). Meanwhile, 50% of TPZ’s net assets may be allocated towards fixed income securities linked to power and energy infrastructure companies.
As an additional means of generating income, TPZ will also employ an option strategy. The fund’s goal is to write call options on securities within its portfolio. These covered calls have terms sitting generally between one and three months.
Lastly, up to 10% of the net assets for the fund may be used to invest in securities issued from outside the United States. This includes both equity and fixed income securities.
By investing in TPZ, traders can tap into the extensive experience Tortoise Capital Advisors has in the energy field. One of the already existing Tortoise ETFs, the Tortoise North American Pipeline Fund (TPYP ), has over $600 million in assets under management.
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